$7.2 Billion - That’s the Check FCA Gets to Cash for Offloading Magneti Marelli
Fiat Chrysler was looking to dispose it off for quite some time nowby Sidd Dhimaan, on
This was in the to-do list for Fiat Chrysler Automobiles ever since the company’s new CEO, Mike Manley, filled the shoes of the late Sergio Marchionne. Now, the company has sold its component unit, Magneti Marelli, to Calsonic Kansei Corporation for €6.2 billion, which is approximately $7.2 Billion at current exchange rates.
The Magneti Marelli Deal in Detail
FCA signed a deal with one of Japan’s leading component suppliers, Calsonic Kansei Corporation, to sell Magneti Marelli for over $7 Billion. Given the company’s reputation in the market, Calsonic Kansei Corporation will not be changing the name, but instead adding CK Holdings to call it ‘Magneti Marelli CK Holdings’.
Post acquisition, the company’s expected annual turnover will be €15.2 Billion, or approximately $17.5 Billion.
This makes the Japanese company the seventh largest automotive component supplier in the world with around 200 facilities and R&D centers in Europe, Asia, and America. Calsonic Kansei Corporation’s chief, Beda Bolzenius, will serve as CEO of the merged entity. Magneti Marelli’s CEO, Ermanno Ferrari, will be joining the new board.
FCA will still continue to work with Magnetti Marelli, which has been part of FCA since 1967. The Italian group has announced a multi-year supply agreement to continue buying parts from Magneti Marelli, especially in Italy. However, the deal won’t be Mopar in any way.
What They Had To Say
Speaking about the deal, Bolzenius said, “Our industry has gone through fierce change in recent years, and the phase to come will be even more dynamic. 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.”
FCA’s CEO, Mike Manley, said, “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.
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.”
It was quite surprising to see FCA wanting to wash its hands free of Magneti Marelli, given that it was running profitably. The winner in this deal would be the buyer because this has not just made the Japanese company the seventh biggest supplier in the world but also increases its footprint. Share your thoughts on this deal in the comments section below.