Fiat Chrysler Automobiles NV, the world’s seventh largest automaker, is reportedly mulling a sale of its auto parts manufacturer Magneti Marelli, according to people that have knowledge of the matter.
The auto supplier is valued at around $3.3 billion and the company is exploring a potential sale after being approached by interested parties. That’s because – unlike is the case with automakers – the auto parts sector is increasingly interested in consolidation, with numerous mergers and acquisitions taking place in recent years. According to three sources that talked to Reuters on condition of anonymity because the proceeds are not public yet, at least a couple of private US equity funds are jointly bidding with industry players in a common purchase proposition for Magneti Marelli, which is used by all major European automakers, as well as peers in the Americas and Asia. The most recent offer, by a group that included a US buyout fund, valued the supplier below 2.5 billion euros ($2.7 billion) and was thus turned down by FCA in June – with the carmaker rooting for at least three billion euros to consider a sale, according to one of the persons. FCA, the world’s seventh largest automaker and the third biggest in the US is covered in debt and the sources pointed out the supplier could be sold for bits or in its entirety – though no final decision has been made.
Magneti Marelli has always been considered as a primary target for takeover plans, with FCA saying it has no interest to sell it but the sources claiming the company has recently reconsidered its position. They added that any decision would be made after October, as the Italian-American group is now focusing on the planned spinoff of its Italian luxury sports car brand Ferrari through an Initial public offering on the New York Stock Exchange, planned for mid-October.