Fiat Chrysler Automobiles has agreed to sell its car-parts unit, Magneti Marelli, to KKR & Co.’s Calsonic Kansei in the first big deal for the Italian-American carmaker under new CEO Mike Manley, people familiar with the matter told Bloomberg.
An announcement is scheduled for as early as Monday, said the people, who asked not to be identified because discussions are private. The transaction value could be as much as 6.2 billion euros ($7.1 billion), two of the people said, and would end months of negotiations over terms.
Representatives for FCA and KKR declined to comment.
A merger of Magneti Marelli and Calsonic Kansei would create a supplier with more than $17 billion in annual revenue and about 65,000 workers from Tokyo to Milan. The sale is one of the first major milestones for Manley, who took over Fiat days before the death of his predecessor Sergio Marchionne in July. It’s also the first M&A transaction overseen by Chairman John Elkann since his so-called deal “maestro” passed away.
Marchionne, who had initially favored separating the business by distributing shares to investors, had said Fiat was open to changing its mind for a “big check.” Fiat opted for a sale of Magneti Marelli instead of listing on the Milan stock exchange after market conditions deteriorated amid global trade tensions and political uncertainty in Italy, as well as profit warnings from automakers and suppliers.
Deteriorating conditions
Daimler AG issued its second profit warning in four months on Friday and automotive supplier Continental AG also cut its outlook in August. Volvo Cars in September delayed plans for a share sale, saying the timing is “not optimal,” and Aston Martin’s shares have slumped since its initial public offering.
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