PE-backed Calsonic Kansei to acquire Magneti Marelli

January 2019 | DEALFRONT | PRIVATE EQUITY & VENTURE CAPITAL

Financier Worldwide Magazine

January 2019 Issue

In a deal that creates a leading, independent supplier of automotive components, Fiat Chrysler (FCA) has sold its Magneti Marelli unit, which develops and manufactures high-tech components for the automotive industry, to Calsonic Kansei, the Japanese automotive company backed by global investment firm KKR & Co.

The agreement represents a transaction value of €6.2bn. Moreover, based on total revenues, the combined businesses of Calsonic Kansei and Magneti Marelli will create the world’s seventh-largest global independent automotive components supplier.

The combined company is expected to be well-positioned to serve its customers around the world due to its enhanced scale, financial strength and the highly complementary nature of its combined product lines and geographic footprint. The new entity will operate out of nearly 200 facilities and R&D centres across Europe, Japan, the Americas and Asia Pacific.

“Having carefully examined a range of options, this combination has emerged as an ideal opportunity to accelerate future growth for the benefit of Magenti Marelli’s customers and its outstanding people,” said Mike Manley, chief executive of FCA. “The combined business will continue to be among FCA’s most important business partners and we would like to see that relationship grow even further in the future.”

FCA has also agreed to a multi-year supply agreement that will further strengthen a mutually beneficial relationship for both Magneti Marelli and FCA’s expanding model range and which will sustain Magneti Marelli’s Italian business operations, positioning it strongly for continued growth and success in the future.

Acquirer Calsonic Kansei, a wholly-owned portfolio company of KKR, is a global manufacturer of a comprehensive product line of auto parts specialising in thermal products, exhaust systems, interiors and electronics. Headquartered in Saitama, Japan, the company recently celebrated its 80th anniversary.

“Our industry has gone through fierce change in recent years and the phase to come will be even more dynamic,” said Beda Bolzenius, chief executive of Calsonic Kansei. “It is exciting to form a strong platform for Calsonic Kansei and Magneti Marelli to work together and create a competitive automotive supplier which is extremely well-placed among the global top ten.”

Founded in 1919 and headquartered in Corbetta, Milan, Magenti Marelli specialises in lighting, powertrains, electronics, exhausts, suspensions, shock absorbers and motorsports. The company has been a subsidiary of FCA and its predecessor companies since 1967. The acquisition will maintain the existing Magneti Marelli operational HQ in Milan.

“This is a transformational day for both Magneti Marelli and Calsonic Kansei, creating as it does a global business of exceptional range, reach, expertise and future prospects,” said Ermanno Ferrari, chief executive of Magneti Marelli. “This is a moment of great opportunity for all our people to be part of a secure, growing and independent company of considerable scale that can look to the future with energy, ambition and confidence.”

Following the closing of the transaction, the combined business will operate under the name Magneti Marelli CK Holdings and be led by Mr Bolzenius. Mr Ferrari will join the board.

The Calsonic Kansei/Magneti Marelli transaction is expected to close in the first half of 2019 and is subject to regulatory approvals and other customary closing conditions.

Mr Bolzenius concluded: “Together, we will benefit from complementary geographic footprints and product lines, while our respective customers will benefit from an increased investment in people, processes and innovative new products.”

Fraser Tennant