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 At least two U.S. private equity funds are looking to team up with
industry players and submit joint bids for Magneti Marelli, which
supplies all major carmakers in Europe, the Americas and Asia, three
sources told Reuters.
A recent offer, by a group including a U.S. buyout fund and valuing
the business at less than 2.5 billion euros ($2.7 billion), was
rebuffed in June as FCA would not agree to sell for less than 3
billion euros, one of the sources said.
Gualberto Ranieri, a U.S.-based spokesman for FCA, said Magneti
Marelli is not for sale.
Debt-laden FCA could sell the unit either in parts or in entirety,
the sources said, adding that no final decision on a disposal had
been taken.
Magneti Marelli has often been touted as a takeover target. While
FCA has always denied any interest in selling, the sources said the
Italian-American carmaker had recently told interested parties it
may reconsider its plans.
The world's seventh-largest carmaker currently has its hands full
with a planned flotation of sports car maker Ferrari, slated for
after mid-October, and any decision on Magneti Marelli would be
taken after that, the sources said.
Yet U.S. buyout funds have been working on the dossier for months,
the sources said.
"Letters are piling up on Fiat's table," one of the sources said.
"We expect Chief Executive (Sergio) Marchionne to react to these
approaches sooner rather than later."
A sale of the unit, which employs more than 38,000 and is present in
19 countries, could help FCA pay off some debt and fund a 48 billion
euro investment plan.
The plan could gain traction as Marchionne's plea to merge with
rival carmaker General Motors <GM.N> is so far falling on deaf ears.
Magneti Marelli had revenue of 6.5 billion euros last year and an
operating profit, including unusual items, of 204 million. It makes
components for lighting, engines, electronics, suspension and
exhausts, among other items.
FULL CONTROL
The bidders would aim to gain full control of Magneti Marelli and
later split it up based on their own expertise, the sources said.
"Everyone will take a fair share of it," said one.
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A number of large buyout funds, mainly U.S.-based, are particularly
interested in Magneti Marelli's lighting unit, which could be carved
out and turned into a standalone firm, the source said.
This unit is worth around 2 billion euros and could appeal to global
players such as Valeo <VLOF.PA>, Hella <HLE.DE>, Koido and Stanley
<6923.T>, a sector banker said.
Asian players could also make a move, another source said, pointing
to China's Wanxiang Group <000559.SZ> as a possible bidder.
Auto parts makers have shown growing appetite for acquisitions as
they look to boost their global presence.
Earlier this year Germany's ZF Friedrichshafen completed the $13.5
billion acquisition of U.S. rival TRW Automotive Holdings.
Italian tire maker Pirelli sold to ChemChina in March as part of a
7.3 billion euro deal.
Marchionne is in no rush to sell Magneti Marelli and will be picky
when choosing a buyer to ensure a stable future supply of components
to FCA plants, which churn out anything from Fiat 500s to luxury
Maseratis.
Another source said FCA may also review strategic options for two
smaller auto components units, Comau and Teksid, with revenues of
1.55 billion euros and 639 million respectively.
In 2012 Marchionne said Fiat could put Magneti Marelli on the block
as an option to raise cash to lift its stake in Chrysler. Fiat
completed its buyout of the U.S. unit last year.
(Additional reporting by Massimo Gaia in Milan and Arno Schuetze in
Frankfurt; Editing by Susan Fenton and David Holmes)
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