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.