Fiat Chrysler Offloads Magneti Marelli Parts Unit for $7.1 Billion

Steph Willems
by Steph Willems
fiat chrysler offloads magneti marelli parts unit for 7 1 billion

A key goal of Fiat Chrysler Automobiles’ financial fitness regimen, started under former CEO Sergio Marchionne, has come to pass under his successor, Mike Manley.

On Monday morning, FCA announced the sale of its Italian parts unit, Magneti Marelli, to Japan’s Calsonic Kansei, itself owned by KKR & Co. The deal, worth $7.1 billion, sees the parts unit don the name Magneti Marelli CK Holdings. It’s likely very good news if you’re an FCA shareholder.

In a joint statement, FCA and Calsonic Kansei said the acquisition, once approved, would create the world’s seventh largest independent automotive parts supplier. Magneti Marelli specializes in lighting, electronics, powertrain components, suspension parts, and exhaust.

“FCA has also agreed to a multi-year Supply Agreement that will further strengthen a mutually beneficial relationship for both Magneti Marelli and FCA’s expanding model range and which will sustain Magneti Marelli’s Italian business operations, positioning it strongly for continued growth and success in the future,” the automaker said.

Once the transaction closes in the first half of 2019, Calsonic Kansei CEO Beda Bolzenius will take the helm of the unified, Japan-based company. Current Magneti Marelli CEO Ermanno Ferrari will sit on the company’s board.

Marchionne had hoped to create a slimmer FCA, and shedding Magneti Marelli was at the top of that list. Early plans to spin off the parts unit collided with market storm clouds in Italy. Rather than threaten the company’s future with a stock listing, the automaker opted for an outright sale, potentially bringing a payday to FCA shareholders.

Joel Levington, a senior credit analyst at Bloomberg Intelligence, claims the sale might create $2 billion in dividends for investors.

“Having carefully examined a range of options to enable Magneti Marelli to express its full potential in the next phase of its development, this combination with Calsonic Kansei has emerged as an ideal opportunity to accelerate Magneti Marelli’s future growth for the benefit of its customers and its outstanding people,” said FCA CEO Mike Manley in a statement.

“The combined business will continue to be among FCA’s most important business partners and we would like to see that relationship grow even further in the future.”

Media reports from September claimed FCA wasn’t willing to drop below a $7 billion price tag in its negotiations with KKR, rejecting an earlier offer from the company.

[Image: Magneti Marelli]

Join the conversation
  • Fred Fred on Oct 22, 2018

    Selling off is the beginning of the end for FCA. If they start to go into debt expect the worse. Get your Hellcat now!

    • See 1 previous
    • Fred Fred on Oct 22, 2018

      @MLS You are pretty hip there with the urban text, had to look it up. I just read an article about how private equity firms robbed grocery store chains and part of the strategy is sell off assets and saddle them with debt. I'm not saying that's what is happening, just that maybe.

  • CincyDavid CincyDavid on Oct 22, 2018

    The WORST parts on my late, lamented Volvo C70 were Magneti Marelli...stupid electronic throttle module bedeviled me for years. Italian electrical & electronic parts are not a much better idea than English parts (Lucas anyone?!?)

  • Cprescott I remember when Fords were affordable.
  • Cprescott As a once very LOYAL FORD buyer, I had to replace my 22 year old Ford (bought new in 1997) once it finally started to have problems at 180k miles. I would have gladly purchased something like this from Ford but they abandoned me as a car buyer. Oddly, Hyundai still builds cars in a variety of flavors so I became a customer of theirs and am very happy. Likely will consider another once this one gets up in mileage.
  • SCE to AUX A friend once struck a mounted tire that was laying flat in the middle of her lane on the PA Turnpike. She was in a low late-90s Grand Prix, and the impact destroyed the facia, core support, radiators, oil pan, transmission, subframe, and suspension. They fixed it all.
  • Dukeisduke Lol, it's not exactly a Chevrolet SS with Holden badging.
  • Dukeisduke Years ago, I was driving southbound along North Central Expressway (south of Mockingbird Lane, for locals), and watched a tire and wheel fall out of the bed of a pickup (no tailgate), bounce along, then centerpunch the front end of a Honda Accord. It wasn't pretty.