KKR-backed Calsonic to buy Fiat Chrysler's Magneti Marelli unit for $7.1 billion

[Bili]

TOKYO/MILAN (Reuters) - Japanese car parts maker Calsonic Kansei, owned by U.S. private equity firm KKR, has agreed to buy Fiat Chrysler’s high-tech parts-making unit Magneti Marelli unit for 6.2 billion euros ($7.1 billion), the companies said.

Magneti Marelli specializes in lighting, powertrain and high-tech electronics. The deal creates the world’s seventh largest independent automotive components supplier with 15.2 billion euros in revenue, they said in a statement.

The agreement will allow the new entity to cut costs through synergies and expand its customer base.

The sale is the first big decision for newly minted FCA Chief Executive Mike Manley, who took over in July when long-time boss Sergio Marchionne fell ill and later died after succumbing to complications from surgery.

The Japanese car parts maker has been in talks with FCA for months and made an initial proposal of 5.8 billion euros for Magneti Marelli, sources have said previously.

The deal comes at a time when components makers are trying to keep up with the automobile sector’s expansion into new technologies like automated driving, connected cars and electric vehicles.

It is expected to close in the first half of next year and is subject to regulatory approvals.

https://www.reuters.com/article/us-...elli-to-calsonic-kansei-sources-idUSKCN1MV0W3

 

[Bili]

https://www.magnetimarelli.com/pres...ate-leading-independent-automotive-components

• The combined business will operate under the name Magneti Marelli CK Holdings*
• Magneti Marelli CK Holdings* will have total revenues of EUR 15.2 billion, creating a top ten global independent automotive components supplier
• FCA will enter into a multi-year Supply Agreement with Magneti Marelli CK Holdings*, underscoring the combined entity’s commitment to maintain Magneti Marelli’s operations in Italy and sustain its industrial footprint and employment levels
• The new combination will maintain the existing Magneti Marelli operational HQ in Corbetta, Milan
• The agreement represents a transaction value of EUR 6.2 billion

 

[AlexB]

Big thing here is Fiat Chrysler's balance sheet goes from the worst (outside of Tesla) of the American's to the Best of the Americans with net cash position of nearly $12 billion U$D after the closing of MM sale by July(mostly likely June/July 2019).

 

[Freshforged]

Wrong decision IMHO. Outsourcing MM at the same time that your dependence upon their services increases (electrification?) is insane!

 

[Bili]

Wrong decision IMHO. Outsourcing MM at the same time that your dependence upon their services increases (electrification?) is insane!

If MM is in phase of developing something for FCA whey will do it.

Don't forget that this deal could be completed deep into 2019.

Also don't think that MM is doing something for FCA bellow the price.
That's not their way. It's quite normal for FCA to use different supplier.

Connection with FCA was hurting MM. The only other way could be a spin off in similar style as with Ferrari. The one where FCA keeps control. But most likely they couldn't pull it that way. And such company would still be tiny.

 

[Freshforged]

You may be right, would rather see them hold an interest—it’s market will only increase.

 

[Ryan]

FCA Announces Agreement To Sell Magneti Marelli
FCA Plans To Sell Components Division To Japanese Firm...

Fiat Chrysler Automobiles N.V. (FCA) announces that it has entered into a definitive agreement to sell its automotive components business Magneti Marelli S.p.A. (“Magneti Marelli”) to CK Holdings Co., Ltd. (“CK Holdings”), a holding company of Calsonic Kansei Corporation (“Calsonic Kansei”), a leading Japanese automotive component supplier. Following the closing of the Transaction, CK Holdings will be renamed as Magneti Marelli CK Holdings*. The combined businesses of Calsonic Kansei and Magneti Marelli will create the world’s 7th largest global independent automotive components supplier based on total revenues.

The agreement represents a transaction value of EUR 6.2 billion ($7.1 Billion USD). The Transaction is expected to close in the first half of 2019 and is subject to regulatory approvals and other customary closing conditions.

Read more here: https://moparinsiders.com/fca-announces-agreement-to-sell-magneti-marelli/

 

[AlfaCuda]

Well many people say that they got $1bn more than what was expected. So it is a very good deal. This cash should help FCA weather any forthcoming storm in the industry.