BREAKING NEWS

BREAKING NEWS

Fiat Chrysler agrees to sell Magneti Marelli to Calsonic Kansei - sources

Now Reading :

Fiat Chrysler agrees to sell Magneti Marelli to Calsonic Kansei - sources

Fiat Chrysler agrees to sell Magneti Marelli to Calsonic Kansei - sources
@ Copyright :
Brendan McDermid(Reuters)
Text size Aa Aa

By Agnieszka Flak and Pamela Barbaglia

MILAN/LONDON (Reuters) - Fiat Chrysler <FCHA.MI> (FCA) has agreed to sell its Magneti Marelli unit to KKR's <KKR.N> Calsonic Kansei, two sources familiar with the matter said on Sunday, adding the deal would be announced on Monday.

The sale is the first big decision for newly minted FCA Chief Executive Mike Manley, who took over in July when long-time boss Sergio Marchionne fell ill and later died after succumbing to complications from surgery.

gi

The transaction values Magneti Marelli, a diversified parts maker that specialises in lighting, powertrain and electronics, at 6.2 billion euros (5.5 billion pounds), excluding debt, one of the sources said.

No other details of the agreement were immediately known.

The sealing of the deal was first reported by Bloomberg.

Calsonic Kansei and KKR were not immediately available for comment.

Reuters reported in September that the Japanese car parts maker had lined up around 5 billion euros in financing from Japanese banks to fund its proposed acquisition of Magneti Marelli.

The Japanese car parts maker, which U.S. private equity fund KKR bought from Nissan and other shareholders in 2016, has been in talks with FCA for months and made an initial proposal of 5.8 billion euros for Magneti Marelli, sources have said previously.

The deal was being structured as an outright acquisition by Calsonic to create a global auto components giant worth around 16 billion euros in revenues, cut costs through synergies and expand the customer base of both suppliers, the people added.

Marchionne had set in motion a process to spin off the unit and distribute its shares to FCA shareholders by early 2019.

However, at one of his last public appearances in June, Marchionne said FCA would still be "receptive" to an offer if it "properly recognised" Magneti Marelli's value.

FCA does not spell out earnings for Magneti Marelli, which sits within the carmaker's components unit alongside robotics specialist Comau and castings firm Teksid. The unit employs around 43,000 people and operates in 19 countries.

Magneti Marelli has often been touted as a takeover target and FCA has fielded interest from various rivals and private equity firms over the years, but so far a deal had remained elusive as potential bidders were offering too little or were only interested in some parts of the business.

FCA also preferred the Calsonic offer to a pure private equity bidder because it limits the risk of the unit being broken up, sources have said.

(Additional reporting by Philip George in Bengaluru; Editing by Kirsten Donovan and Sandra Maler)

euronews provides breaking news articles from reuters as a service to its readers, but does not edit the articles it publishes. Articles appear on euronews.com for a limited time.