KKR in conversation to buy Fiat & # 39; s Magneti Marelli



KKR is in talks to buy Magneti Marelli, the manufacturer of car parts, in a deal worth up to 6 billion euros, say two people with direct knowledge of the case.

The US private equity firm is one of the few potential bidders, including Apollo Global Management, Bain Capital and India & # 39; s Mahindra following the unit, which is corrected from Fiat Fiat Chrysler Automobiles.

Attempts by FCA to maximize the value of a transaction were complicated by changes in the group's leadership after chief executive Sergio Marchionne died last month.

Marchionne, an arch deal maker, oversaw the spin-out process, assisted by Alfredo Altavilla, the European head of FCA, who has since left the company.

The departure of Mr. Altavilla was motivated by the selection of another internal candidate, Mike Manley, as replacement for Marchionne.

John Elkann, heir to the Agnelli family empire and chairman of Exor, the vehicle that controls his interests in FCA and other holdings, has also become more involved in the process since Marchionne's death.

A person in the vicinity of the talks said that the value of Magneti including debts could amount to € 6 billion. The division employs approximately 43,000 people with companies in 19 countries.

KKR is expected to use the Calsonic Kansei, a Japanese manufacturer of parts it owns, for the deal in a move that would create a global powerhouse for components with room to create synergies and cut overlapping projects, a person said.

If that worked, it would be the last big deal for KKR in the months after it had acquired the spread business of Unilever in a deal of € 7 billion.

KKR & # 39; s new co-president, Joe Bae, sits on the board of Exor. The private equity firm, whose interest was first reported by the Wall Street Journal, declined to comment.

Apollo and Bain were not immediately available for comment.

The intention is to mention Magneti at the Milan show, a deal similar to the carve-outs of Ferrari and truck and tractor maker CNH Industrials of FCA that Marchionne had overseen.

A FCA spokesman said: "As previously announced, FCA is following a plan to separate the Magneti Marelli activities, subject to final approval by the FCA board and shareholders.

"In the meantime, as the company has previously indicated, it will be bona fide to evaluate proposals for alternative transactions that may be in the company's interest."

The decision to sell to KKR or to continue with the offer is the first important strategic decision for Mr. Manley, who previously ran the very profitable Jeep and Ram brands of the car manufacturer.

He has inherited an ambitious five-year plan for the car manufacturer that aims to more than double its profits by 2022 and to penetrate electric cars and new business areas, such as the financing of ride-hailing fleets.

After a call for profit within a week of taking over the company, Mr. Manley said he was planning to deliver the plan.


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