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Home / Business / Fiat sells Magneti car parts to KKR's Calsonic for 6 billion Euro

Fiat sells Magneti car parts to KKR's Calsonic for 6 billion Euro



Fiat Chrysler Automobiles will announce the sale of component maker Magneti Marelli to a competitor divested by KKR for € 6.2 billion as early as Monday, according to two people familiar with the details.

The combination of Magneti and KKR Calsonic Kansei will create one of the world's largest manufacturers of components with a total income 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 its business and Continental doing preparations to do the same.

The move is the latest in a series of "buy-and-build" agreements by private equity groups, so they can graft synergies and bulk up companies before selling them. It marks KKR's last significant deal for months after it took over Unilevers spread company for 7 billion Euro.

The newly established business, which will employ around 65,000 people, will be run and managed by Calsonic, although Magnetic's CEO Ermanno Ferrari will remain within 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 businesses and follows the spin-offs of Ferrari and Iveco truck owner CNH Industrials under the Italian car manufacturer's former CEO Sergio Marchionne.

FCA's plan to sell or list Magneti was complicated by Marchionne's sudden departure from the company just before his death in July.

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As with all FCA's agreements during his tenure, the Italian-Canadian business magazine had been the front man and driving force in the movement.

The company had prepared to spin the division as it received more approaches. Possible other bidders included Apollo Global Management, Bain Capital and Indias Mahindra, although KKR was always advancing for the division, according to a person.

Buyout Group New Co-President Joe Bae is on the board of Exor, the vehicle that controls the Agnelli family's efforts in FCA and other businesses.

Complete the sale will lead to a fall in the FCA, as well as mark 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 empire, had also been more involved in the process since Marchionne's death.

Additional Reporting by Javier Espinoza

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