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The first big deal by FCA's newly-appointed chief executive Mike
Manley, who took over in July after the sudden death of
long-time boss Sergio Marchionne, creates a company with revenue
of 15.2 billion euros ($17.5 billion), the companies said.
The newly formed Magneti Marelli CK Holdings is likely to cut
costs through synergies and expand its customer base as
components makers try to keep up with a shift by carmakers into
autonomous driving, connected cars and electric vehicles.
"This combination with Calsonic Kansei has emerged as an ideal
opportunity to accelerate Magneti Marelli's future growth,"
Manley said on Monday of the FCA unit, which specializes in
lighting, powertrain and high-tech electronics.
FCA shares were up 5.2 percent at 0906 GMT as investors welcomed
the hefty price tag, which will boost FCA's net cash position
and raises expectations of a share buyback.
"Getting this transaction completed at the price agreed is a
significant early milestone and accomplishment," George Galliers,
an analyst at Evercore ISI, said of Manley and his team's
ability to match Marchionne's deal-making reputation.
Marchionne had set in motion a process to spin off the unit and
distribute its shares to FCA shareholders by early 2019, but
said in June that FCA would still be "receptive" to an offer.
Neither FCA nor its top shareholder, Fiat's founding Agnelli
family, will have a stake in the combined business but FCA said
it would enter into a multi-year agreement to secure supplies to
its plants and also to maintain operations and staff in Italy.
GLOBAL AMBITION
KKR bought Calsonic from Nissan and other shareholders in 2016,
saying it would help the parts maker, which relies on the
Japanese carmaker for most of its sales, to expand globally.
Calsonic has been in talks with FCA for months and made an
initial 5.8 billion euro bid, sources have said.
FCA does not break out earnings for Magneti Marelli, which sits
within its components unit alongside robotics specialist Comau
and castings firm Teksid. The unit employs around 43,000 people
and operates in 19 countries.
A takeover of Magneti Marelli had remained elusive as potential
bidders were offering too little or were only interested in some
parts of the business.
FCA also preferred the Calsonic offer to a pure private equity
bidder because it limits the risk of the unit being broken up,
sources have said.
JP Morgan and Goldman Sachs were financial advisers to FCA on
the deal, which is expected to close in the first half of next
year and is subject to regulatory approvals.
($1 = 0.8694 euros)
(Additional reporting by Francesca Landini, editing by Edwina
Gibbs and Alexander Smith)
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