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Equity firm reported in front to buy Chrysler

A private-equity firm, Cerberus Capital Management, has moved to the front in talks to buy the ailing Chrysler division from DaimlerChrysler, the Detroit News reported Saturday.

However a German news report said a Canadian firm, Magna International Inc., which this week gained a Russian backer, was still keen and did not rule out manufacturing Chrysler cars in Russia. Quoting 'people familiar with the situation,' the Detroit News said the German-based carmaker had been in detailed talks with Cerberus for the past two weeks, while two other contenders for Chrysler appeared to have been relegated to the sidelines.

People close to the sale process said that Blackstone Group and Magna had not been involved in advanced talks with DaimlerChrysler since submitting formal bids for Chrysler last month. Canadian components supplier Magna had been reported in the past two weeks to be the favourite to win the Chrysler auction. Cerberus has Wolfgang Bernhard, who was Chrysler chief operating officer from 2001 to 2004 and was later a senior Volkswagen executive, leading the talks. Cerberus would absorb Chrysler's auto-financing operations into GMAC Financial Services, a former General Motors Corp. unit now controlled by Cerberus, the sources told the US newspaper.

DaimlerChrysler CEO Dieter Zetsche opened the sale option on the US division in February. The group's top management and supervisory board were set to meet next week, suggesting a decision might be close, the Detroit News said. A German weekly, Wirtschafts Woche, meanwhile said Magna and Toronto-based equity firm Onex were jointly seeking 80% of Chrysler with the German company to retain the rest. The online version of the weekly said senior Magna executives were concerned that remarks by Magna deputy chief executive Siegfried Wolf suggested weak interest. The weekly said Magna was keener than ever. Russian Machines, part of a conglomerate controlled by Russian tycoon Oleg Deripaska, said this week it would take a €1.5 billion stake in Magna. The Canadian group believed this would open new sales opportunities in Russia, already a major market for Chrysler, and even allow it to possibly manufacture there, Wirtschafts Woche said, quoting top Magna executives. (