Fiat Chrysler has agreed to sell automotive parts unit Magneti Marelli in a deal worth 6.2 billion euros ($7.1 billion). One of the first big moves made by new CEO Mike Manley, the deal frees up FCA to focus on delivering the promises it outlined in its five-year plan.
Magneti Marelli makes everything from headlights and instrument clusters to exhausts, suspensions, and powertrains. FCA sold the company to Calsonic Kansei, a Japanese manufacturer specializing in cooling systems, exhaust parts, electronics, and interiors. The combined business will create the world’s seventh largest global independent supplier of automotive parts based on total revenue.
“The combined company will be well positioned to serve its customers around the world due to its enhanced scale, financial strength and the highly complementary nature of its combined product lines and geographic footprint,” FCA said in a statement. The new business will operate from nearly 200 facilities and R & D centers across the world.
As part of the agreement, FCA will acquire parts from the new company and will help maintain Magneti Marelli’s business operations in Italy. FCA will not take a stake in the combined business.
Former CEO Sergio Marchionne had initiated the process to spin off Magneti Marelli before his tragic passing, but he also said he was open to an offer. The money FCA gains from the deal will set the stage for dividend payments it outlined in its five-year plan in June. It also gives FCA funding it can use to catch up with other automakers on electrified cars.
Subject to regulatory approvals, the deal is expected to close in the first half of next year.
Source: FCA, Reuters
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