Fiat Chrysler Automobiles will announce the sale of component maker Magneti Marelli to a rival manufacturer owned by KKR for…
Fiat Chrysler Automobiles will announce the sale of component maker Magneti Marelli to a rival manufacturer owned by KKR for 6.2 billion euros as early as Monday, according to two persons familiar with the details.
The combination of Magneti and KKR Calsonic Kansei will create one of the world’s largest manufacturers of components with total revenue of $ 17 billion worldwide.
The automotive industry is facing structural changes, with the advent of electric and self-propelled technologies that threaten the traditional business models of both car manufacturers and their suppliers.
The component industry has already seen several major moves, with Delphi splitting up its operations and continental preparations to do the same.
Moved is the latest in a series of “buy-and-build” agreements by private equity groups that enable them to transplant synergies and bulk up businesses before they are sold on them. It marks KKR’s most recent significant deal for months after the acquisition of Unilever’s spread operations of EUR 7 billion.
The newly formed business, which will employ approximately 65,000 people, will be run and managed by Calsonic, although Magnetic’s Managing Director Ermanno Ferrari will be in the new group, according to one of the people.
FCA refused to comment. KKR was not immediately available for comments.
Relief Magneti slims FCA’s portfolio of companies and follows the spin offerings of Ferrari and Iveco truck owner CNH Industrials under the Italian carmaker’s former CEO Sergio Marchionne.
FCA’s plan to sell or list Magneti was complicated by Mr Marchionne’s sudden departure from the company just before his death in July.
As with all the FCA’s contracts during his service, the Italian-Canadian business magazine had been the frontman and driving force for the move.
The company had prepared to spin the division when it received several approaches. Possible other bidders included Apollo Global Management, Bain Capital and Indias Mahindra, although KKR was always the premier for the division, according to a person.
The new group co-chairman Joe Bae of the Purchasing Group is on the Board of Exor, the vehicle that controls the Agnelli family spells in FCA and other companies.
Completing the sale will lead to a fall in the fall of FCA, as well as marking the first major transaction for new CEO Mike Manley, former head of the company’s Jeep and Ram brands that took over in the summer.
Exor President John Elkann, heir to the Agnelli family, had also been more involved in the process since Marchionne’s death.
Further Reporting by Javier Espinoza