KKR In Talks to Acquire Fiat Chrysler’s Magneti Marelli Autoparts Unit
Magneti valued around $3.7 billion by analysts
U.S. buyout firm KKR KKR 1.33% & Co. is in talks to acquire Fiat Chrysler Automobiles N.V . FCAU 1.47% ’s global auto parts business Magneti Marelli, according to people familiar with the matter.
The potential sale price couldn’t immediately be learned. Magneti is valued around €3.23 billion ($3.7 billion) by some analysts, suggesting the sale price could exceed that level. Talks could still collapse before a final agreement is reached.
A possible deal comes at a time when FCA’s newly appointed Chief Executive Mike Manley is tasked with managing the auto maker’s lower margin businesses in Europe following the death last month of his predecessor Sergio Marchionne.
Under Mr. Marchionne, FCA was focused on spinning off Magenti to the auto maker’s shareholders and listing the stock by the end of this year or early next year on the Milan stock exchange. An outright sale suggests Mr. Manley expects to generate more value than it would from a spinoff, while freeing him to focus more of his attention on investing in FCA’s core portfolio of Jeep, Ram and other car brands.
Magneti employs over 40,000 people, making a range of auto components. It generated revenue of €7.9 billion in 2016 according to the company’s website. FCA’s latest annual report said 34% of Magneti’s revenue came from business within the group.
KKR is expected to acquire Magneti through Japan-based Calsonic Kansei Corp., according to people familiar with the matter, creating an auto parts giant that could cut costs by eliminating overlapping operations. The New York-based PE firm acquired Calsonic last year from Nissan and other shareholders for about $4.5 billion.