Fiat Chrysler sells Magneti Marelli

Marco Green
October 23, 2018

A screen displays the ticker information for Fiat Chrysler Automobiles NV at the post where it's traded on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., January 12, 2016.

Now known as Magneti Marelli CK Holdings, the company is estimated to bring €15.2 billion in revenue, translating to one of the largest automotive components suppliers in the world. Selling Magneti Marelli boosts the net cash position of the Italo-American automotive group, which could translate to a buyback of shares at some point in the future.

It will also help FCA pay for much needed investments in hybrid and electric cars in order to remain compliant with stricter future emissions regulations in the European Union and elsewhere.

Calsonic has been in talks with FCA for months and made an initial 5.8 billion euro bid, sources have said.

It was reported that FCA will not have a stake in the new business, but FCA said it had agreed to a multi-year agreement with the new concern for the supply of components, which will ensure the sustainability of Magneti Marelli's Italian business operations and employment levels.

Fiat Chrysler said earlier this year that it planned to hive off its auto parts unit.

The Transaction represents a unique opportunity to combine two successful businesses to create one of the leading global independent automotive components suppliers, with combined revenues of Euro 15.2 billion (JPY 1,975 billion). Magneti Marelli employes 43,000 people in 19 countries. Following the closing of the Transaction, CK Holdings will be renamed as Magneti Marelli CK Holdings*. The agreement represents a transaction value of Euro 6.2 billion.

A takeover of Magneti Marelli had seemed elusive as potential bidders were offering too little or were only interested in some parts of the business. FCA preferred to sell to a firm like Calsonic over a pure private equity firm as it would reduce the likelihood of breaking up the business.

Magneti Marelli specialises in lighting, electronics, suspension and powertrain technology.

The transaction is expected to be completed in the first half of 2019, and the new combined company will be led by Beda Bolzenius, who is now the CEO of Calsonic Kansei.

Other reports by Click Lancashire

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