Fiat Chrysler Sells Magneti Marelli For $7 Billion

Cornelia Mascio
Ottobre 23, 2018

Fiat Chrysler Automobiles has announced the sale of its auto components division to Japanese automotive component supplier Calsoni Kansei Corporation in a deal valued at 6.2 billion euros ($7 billion).

Mike Manley, the new head of Fiat Chrysler, said the deal will boost growth at Magneti Marelli which will remain one of the group's most important business partners. The statement said new entity will be called Magneti Marelli CK Holdings, and would build on the strength of the companies' complementary product lines.

Calsonic is paying around 17 times next year's estimated earnings for Magneti Marelli, according to Galliers' calculations. "The transaction also recognises the full strategic value of Magneti Marelli and is another important step in our relentless focus on value creation".

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.

There will be a multi-year supply agreement with Fiat Chrysler. 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 employes 43,000 people in 19 countries.

JP Morgan and Goldman Sachs were financial advisers to FCA on the Magneti Marelli deal, which is expected to close in the first half of next year and is subject to regulatory approvals.

Marchionne had set in motion a process to spin off the unit and distribute its shares to FCA shareholders by early 2019, but said in June that FCA would still be "receptive" to an offer.

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