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Will Parts Division Be Another Spinoff?

by David Zatz on

While recent reports claimed that FCA is looking into spinning off Magneti Marelli for over $3.3 billion, perhaps FCA will spin off the massive parts company instead. That way, they could generate cash, while maintaining control of a key (and profitable) supplier.

Spinning off Magneti Marelli as a separate corporation, while retaining at least 50.1% of the stock, would give FCA full control as well as a large chunk of cash. Looking at unsolicited bids for the division could set the value for the company, a method far more accurate for the public offering than most analysts’ projections.

Magneti Marelli was started in 1919 as a joint venture with Fiat. Fiat Chrysler Automobiles, or FCA, also owns automotive suppliers Comau and Teksid. Sergio Marchionne had said in 2012 that they may float Magneti Marelli to raise the cash to buy Chrysler. (Credit goes to multiple Allpar forum members for raising these questions.)

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