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May 17, 2004, Aurora, Ontario, Canada and Auburn Hills, Michigan - Magna International Inc. (TSX: MG.A, MG.B; NYSE: MGA) and DaimlerChrysler Corporation announced today that they have signed an agreement by which Magna would acquire the worldwide operations of DaimlerChrysler Corporation’s wholly-owned subsidiary, New Venture Gear, Inc. (“NVG”). The U.S. operations will be acquired by a new joint venture, named New Process Gear, Inc., which will initially be owned 80% by Magna and 20% by DaimlerChrysler Corporation and will have facilities in Syracuse, New York and Troy, Michigan. The European operation, located in Roitzsch, Germany, will be acquired directly by Magna. Magna will acquire the remaining interest in New Process Gear, Inc. in September 2007.
The total purchase price payable by Magna for 100% of NVG’s business is approximately U.S.$435 million based on NVG’s financial position at December 31, 2003 and is subject to various price adjustments to reflect changes since that date and certain other matters. The purchase price will be satisfied in cash and notes.
Frank Stronach, Magna’s Chairman, interim President and interim CEO, commented: "This transaction is an important step in establishing our newly formed MAGNA Drivetrain group as a leading global supplier of technologically advanced four-wheel and all-wheel drive systems. With a strong manufacturing and development presence in both North America and Europe, we are well positioned to support the expected growth in our drivetrain business in the coming years."
Dieter Zetsche, President and CEO of DaimlerChrysler Corporation, added: "This agreement will allow us to focus on our core business of creating and building exciting cars and trucks. In addition, our relationship with Magna will provide us with access to the latest drivetrain technology, while providing opportunities for employment with a leading global enterprise. Once again, we’ve entered into an agreement that makes both good business and good ‘people’ sense."
NVG is a leading supplier of transfer cases and other drivetrain products in North America, with 2003 sales of approximately U.S.$1.5 billion. Its customers include DaimlerChrysler, General Motors, Ford, Volkswagen and Porsche. The business consists of a 1.8 million square foot manufacturing facility in Syracuse, New York, which will be leased by DaimlerChrysler to the joint venture company; a 95,000 square foot manufacturing facility in Roitzsch, Germany; and a research & development center and sales office in Troy, Michigan. Closing of the transaction is subject to various conditions, including obtaining all necessary antitrust and other regulatory and third-party approvals, as well as reaching a satisfactory collective bargaining agreement with the UAW.
For further information: please contact Vincent Galifi at Magna at (905) 726-7100; at DaimlerChrysler, contact Mary Gauthier -- (248) 512-2272, or Shawn Morgan -- (248) 512-2692.
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