Magna's CEO Eyeing Tech Acquisitions With $6 Billion Cash Stash

(Bloomberg) -- Magna International Inc., the largest auto supplier in North America, wants to use its growing cash hoard to shop for technology that could give it an edge in the red-hot fields of electrified and autonomous driving.

The supplier expects to generate $6 billion in free cash flow from 2018 to 2020, which it plans to spend on new tech, acquisitions and share buybacks, Chief Executive Officer Don Walker said in an interview on the sidelines of investor meetings in New York on Wednesday.

“We could use all of it for an acquisition, or we could use none of it for an acquisition, depending on how attractive they are,” Walker said. “If we didn't, we'd use it to buy back stock.”

Magna is touting its tech prowess to investors in a bid to jolt its share price and bolster a valuation that has lagged industry peers. The Aurora, Ontario-based company trades at about eight times 12-month future earnings, less than half the valuation of Aptiv Plc, the self-driving software company split from the former Delphi Automotive Plc in December, and Swedish supplier Autoliv Inc., which also plans to spin off a unit focused on electronic and safety features for self-driving vehicles.

Walker reiterated Magna has no plans to shake up its corporate structure, arguing its body exteriors business, which brought in about 40 percent of its approximately $40 billion in sales last year, is crucial for coming up with solutions for lightening electrified and autonomous vehicles. In January, supplier Continental AG acknowledged it's exploring a restructuring, becoming the latest auto supplier to ponder a shakeup as the industry grapples with the twin trends of electric and self-driving vehicles.

To contact the reporter on this story: Gabrielle Coppola in New York at gcoppola@bloomberg.net.

To contact the editors responsible for this story: Craig Trudell at ctrudell1@bloomberg.net, Anne Riley Moffat, Jacqueline Thorpe

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