Fiat Chrysler Sells Magneti Marelli For $7 Billion

One of the biggest tasks left to Mike Manley when he took over from Sergio Marchionne as chief executive of Fiat Chrysler Automobiles was the pending spin-off of Magneti Marelli. And now he’s done it, selling off the component-supply unit to a leading competitor.

In a deal worth €6.2 billion (~$7.16b), FCA will sell the profitable business to Calsonic Kansei Corporation, one of the leading parts suppliers in Japan. The move will see the combined unit renamed Magneti Marelli CK Holdings, and stands to emerge as the seventh largest automotive component suppliers in the industry.

Together, Magneti Marelli CK is expected to turn over a combined €15.2 billion ($17.5b) per year, operating some 200 facilities and R&D centers in Europe, Asia, and the Americas. Calsonic Kansei chief Beda Bolzenius will serve as CEO of the merged entity, with Magneti Marelli’s CEO Ermanno Ferrari joining the new board.

“Our industry has gone through fierce change in recent years and the phase to come will be even more dynamic,” said Bolzenius. “It is exciting to form a strong platform for Calsonic Kansei and Magneti Marelli to work together and create a competitive automotive supplier which is extremely well placed among the global Top Ten. Together, we will benefit from complementary geographic footprints and product lines, while our respective customers will benefit from an increased investment in people, processes and innovative new products.”

While the sale will (pending regulatory and shareholder approval) separate Magneti Marelli from the Fiat Chrysler group (and its constituent predecessor entities) of which it has been part since 1967, the two won’t sever ties entirely. Together with the spin-off, FCA announced a multi-year supply agreement to continue buying parts from Magneti Marelli, particularly in Italy. The move isn’t expected, however, to affect Mopar – the equivalent parts division of FCA US, LLC.

“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,” added FCA CEO Mike Manley. “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. The transaction also recognises the full strategic value of Magneti Marelli and is another important step in our relentless focus on value creation.”