Breaking Up Isn't Hard to Do: Fiat Chrysler Announces Parts Division Spin-off
As Magneti Marelli prepares for its 100th birthday next year, the Italian parts supplier can expect to mark the occasion while newly single.
In a bid to streamline its operations, Fiat Chrysler Automobiles has announced it is moving forward with a plan to spin off the weighty subsidiary. The split should be complete by the end of this year or early next.
Magneti Marelli manufactures numerous automotive components, from lighting to powertrain parts to electronics, and employs roughly 43,000 workers in 19 countries. Dozens of manufacturing plants exist under its umbrella. Started as a joint venture between Fiat and Ercole Marelli in 1919, the company officially became a Fiat subsidiary in 1967.
According to Reuters, analysts estimate the division’s net worth at between 4.4 and 6.1 billion dollars.
Early Thursday, FCA issued a statement saying its board of directors had “authorized FCA management to develop and implement a plan to separate the Magneti Marelli business from FCA and to distribute shares of a new holding company for Magneti Marelli to the shareholders of FCA.” The company’s shares will be listen on the Milan stock exchange.
FCA CEO Sergio Marchionne stated that spinning off the division will “deliver value” to FCA shareholders and put Magneti Marelli in a position for growth. “The spin-off will also allow FCA to further focus on its core portfolio while at the same time improving its capital position,” he said.
The parts business was just one of the pieces of the FCA pie rumored to separate from the flock last year. Alfa Romeo and Maserati were included in this list, but Marchionne squashed murmurs of the brands’ impending spin-off. The same rumors circulated around Jeep after reports emerged Chinese automakers expressing interest in acquiring the brand. Jeep, Marchionne said, is not for sale.
FCA remains on a fairly aggressive debt-cutting spree, with the automaker hoping to finish the year in the black.
[Image: Fiat Chrysler Automobiles]
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