Fiat may sell its components unit Magneti Marelli to obtain additional cash it needs to acquire more of Chrysler Group, CEO Sergio Marchionne announced.
The CEO of both Fiat and Chrysler said at a news conference the Italian carmaker has no need to borrow or appeal to equity markets to raise cash to buy remaining Chrysler shares. Fiat owns a controlling stake of 58.5 percent of the third-largest U.S. automaker.
Marchionne said that, while Fiat has enough cash available, it could raise even more money if necessary by selling assets. He said one of the assets that could be sold is Magneti Marelli, a company that had revenue of €5.8 billion ($7.6 billion) last year.
Given the current weak economic environment, “the availability of cash is crucial. It’s better to be safe than sorry,” Marchionne was quoted as saying by Reuters. Magneti Marelli designs and builds automotive components including lighting, electronics, suspension and exhaust. The Company has about 35,000 employees worldwide.
Fiat is currently undergoing negotiations with an UAW union trust fund for the acquisition of the remaining 41.5 percent of Chrysler shares that the fund owns. The trust fund, which pays medical benefits to retired workers, acquired the shares during Chrysler’s 2009 bankruptcy and bailout.