Fiat Chrysler Automobiles is going ahead with a plan to spin off its Magneti Marelli parts business into a separate entity, initiating the process this month by creating a new unit called “MM Srl”, into which will be folded more than a dozen holdings from around the world. According to Reuters, which got ahold of a document detailing FCA’s initial Magneti spinoff plans, MM will later be incorporated into a holding company in the Netherlands through a cross-border merger.
The move is expected to create significant value at Magneti Marelli, while at the same time “purifying” Fiat Chrysler’s portfolio. FCA has had good luck already in spinning off individual business units, as it did with CNH Industrial and the Ferrari sportscar marque. Magneti Marelli could be worth between $4.2 and $5.8 billion on its own, according to analysts, and Reuters says its separation from FCA could allow CEO Sergio Marchionne to introduce a loyalty share scheme as the company did with CNH and Ferrari, giving long-time investors multiple voting rights.
Magneti Marelli operates in a total of 19 countries around the world, employing some 43k people. The company has been a subsidiary of Fiat since 1967, and today, it produces lighting, electronics, body control systems, powertrain control systems, suspension systems and components, and plenty else for the automotive industry. Magneti also produces high-tech electronic and electro-mechanical systems for racing cars and motorcycles.
Fiat Chrysler Automobiles has said that it expects the spin-off of Magneti Marelli to be completed later this year or early in 2019, although the company declined to comment for Reuters’ story.