BY Richard Summerfield
Japanese automotive firm Calsonic Kansei has agreed to acquire the Magneti Marelli unit from Fiat Chrysler in a $7.1bn all-cash deal, excluding debt. The transaction is expected to close in the first half of 2019, subject to customary closing conditions and regulatory approvals, the companies announced in a statement.
By acquiring the unit, private equity-backed Calsonic will become Magneti Marelli CK Holdings, the world’s 10th largest auto-parts manufacturer with $17bn in annual revenue and a global workforce of around 65,000. Calsonic’s chief executive, Beda Bolzenius, will oversee the new organisation.
“Our industry has gone through fierce change in recent years and the phase to come will be even more dynamic,” said Mr 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.”
“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,” said Mike Manley, chief executive of FCA. “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.”
Fiat Chrysler will enter into a multi-year supply agreement with its former unit which will maintain Marelli’s presence in Italy and maintain employment levels. The company had explored other options for divesting the unit previously before opting for a sale. With market conditions deteriorating amid global trade tensions and political uncertainty in Italy, as well as profit warnings from automakers and suppliers, a sale was considered the most viable option.
Private equity giant KKR acquired Calsonic from Nisan and other shareholders in 2016 and claimed it would help the company expand internationally.