Magna shares slump on U.S. antitrust probe
WASHINGTON (Reuters) - Shares of Magna International (MG.TO: Quote) (MGA.N: Quote) slipped on Thursday after the auto-parts maker said it was co-operating with a U.S. antitrust investigation into the automobile tooling industry.
Analysts said the Justice Department investigation was likely part of a broader antitrust probe into the auto parts sector, which has been underway for at least 18 months, and did not expect the outcome to have a material impact on the Ontario-based Magna, one of the world's largest auto-parts makers.
Magna said the DOJ had requested documents related to various tooling bids, including a program for which a subsidiary within its Cosma International unit acted as tier 1 tooling supplier.
"I am confirming that the antitrust division is investigating the possibility of anti-competitive practices in the automotive tooling industry," said Justice Department spokeswoman Gina Talamona.
Tooling, which is the equipment used to make auto parts, makes up about 8 percent of Magna's sales and a smaller portion of its profits, Canaccord Genuity analyst David Tyerman said.
"It seems unlikely that any fine would be large enough to materially impact the company, given that it has $1.7 billion in cash currently," Tyerman said.
The Justice Department has a separate antitrust investigation into the auto parts business, said Talamona, who declined to say which companies were involved.
The Justice Department has contacted TRW Automotive Holdings Corp TRW.N and Autoliv Inc (ALV.N: Quote) in connection with possible violations of antitrust law, the two companies have said.
Magna's shares were down C$1.82 at C$37.13 on the Toronto Stock Exchange on Thursday afternoon. In New York, the stock closed down 5 percent at $36.41.
(Reporting by Nicole Mordant in Vancouver and Sakthi Prasad in Bangalore; editing by Rob Wilson, Bernard Orr)
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