Calsonic Kansei – a Japanese auto supplier owned by U.S.-based investor firm KKR – has secured €5 billion (nearly $5.9 billion USD) from Japanese banks in order to purchase Fiat Chrysler Automobiles’ Magneti Marelli parts business, Reuters reports. FCA had planned on spinning Magneti Marelli off, much as it did with its Ferrari and CNH Industrial business units, but it’s understood that those plans have since deteriorated, possibly leaving a sale as FCA’s only option.
The KKR-owned Calsonic made FCA an initial offer of €5.8 billion (about $6.8 billion USD) for Magneti Marelli, sources have told Reuters, although the final sale price could be substantially different after the company performs its due diligence on the Italian auto parts business. However, even €5.8 billion might not be enough for FCA, which is seeking more than €6 billion for the business unit, leaving Calsonic struggling to try and make a deal happen.
Despite the gap in both parties’ price expectations, the Japanese auto supplier is currently the only company FCA is discussing a sale with.
One way that Calsonic and FCA could end up bridging the gap, according to Reuters‘ sources, is by allowing the Agnelli family a stake in the company formed by merging Magneti Marelli with Calsonic Kansei. “A hybrid structure would allow the Agnellis to realize some value after the listing and would lower the amount of debt needed to finance the deal,” one of them said.
An automotive parts business formed from the combination of Calsonic and Magneti could be worth a total of €16 billion (nearly $19 billion) in revenues, and the eventual goal would be to have the company listed independently on the stock market, the sources said.