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. Last Updated: 07/27/2016

Magna to Sign Deal With GAZ

Canadian car parts giant Magna International will sign a deal to form a strategic alliance with billionaire Oleg Deripaska's GAZ Group to cash in on the booming automotive market in Russia, the Federal Industry Agency said Thursday.

Magna Europe, a unit of Magna International, will sign a strategic cooperation agreement with GAZ Group and Russkiye Mashiny, Deripaska's machine-manufacturing holding company, the agency said.

"The agreements will become a considerable landmark on the way to creating modern production of automotive components and parts in Russia," the agency said.

The Federal Industry Agency and GAZ declined to comment ahead of the official presentation on Nov. 18.

Magna is also widely expected to team up with AvtoVAZ, the country's ailing No. 1 carmaker, to help it develop a new model.

Ernst & Young automotive analyst Ivan Bonchev said the deal made sense because Magna was a major supplier for DaimlerChrysler and GAZ needed help with the production of Chrysler cars in the country.

In April, GAZ bought licenses and equipment from U.S. carmaker Chrysler to make Sebring and Dodge Stratus sedans under its own brand.

"It makes great sense to strike a deal with Magna," Bonchev said.

Magna, which has an assembly plant in Graz, Austria, could also help the second-largest carmaker with engineering and even assembly, Bonchev added.

"It would be beneficial for both companies," Bonchev said.