Fiat Chrysler Automobiles has confirmed that it intends to spin off its parts subsidiary Magneti Marelli by the end of the year or early next, executing a move the global automaker has been expected for nearly two years now to carry out. In a statement, FCA said that the spin-off will “deliver value to FCA shareholders, while providing the operational flexibility necessary for Magneti Marelli’s strategic growth in the coming years.”
South Korean conglomerate Samsung had been in talks to acquire Magneti Marelli since mid-2016, apparently interested in its automotive lighting, in-car entertainment, and telematics business ventures, but the company backed out on a potential deal months later. Bain Capital, Tenneco Inc., and Italian brakes supplier Brembo have each reportedly expressed interest in all or part of the business.
Fiat Chrysler CEO Sergio Marchionne says that by divesting itself of Magneti Marelli, which supplies lighting and other components to FCA vehicles, it will be able to improve its capital position and focus on strengthening its product portfolio. The parts business has an estimated worth of around $6 billion, and spinning it off could minimize – possibly even eliminate – FCA’s debt, making the automaker more attractive for a merger.
“A separation of FCA and Magneti Marelli is a key ingredient of the 2018-2022 Business Plan which will be communicated in June,” Marchionne says. The spin-off will be subject to regulatory approval, as well as final approval from Fiat Chrysler’s board of directors. Assuming it goes through, Magneti Marelli will be listed on the Milan stock exchange, FCA says.
Magneti Marelli, founded in 1919, employs about 43,000 people producing lighting, powertrain, electronic, and suspension components and systems, along with miscellaneous other automotive parts. It could join the ranks of Ferrari and CNH Industrial: two other FCA businesses that are now independently traded.
(Source: Automotive News)