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Will FCA Sell Its Parts Division?

by David Zatz on

Reuters reported that FCA may sell parts maker Magneti Marelli to reduce its debt. The news outlet claimed that two or more American private-equity funds are involved in partnerships to buy the parts maker, which provides parts for “all major carmakers.”

FCA’s top spokesman, Gualberto Ranieri, said that the parts unit is not for sale. However, Reuters claimed that when FCA was offered 2.5 billion euros, they said they would not sell for under 3 billion, and in 2012, Sergio Marchionne said that Magneti Marelli could be sold to raise cash to buy the rest of Chrysler. (This later turned out to be unnecessary.)

Magneti Marelli, Comau, and Teksid

Magneti Marelli is the 30th largest supplier in the world, with sales of $8 billion last year, around 2/3 of which was in Europe. Their operating profit was $221 million. The division would likely be split up after its purchase.

Magneti Marelli is separate from the Mopar aftermarket parts group.

FCA could also sell its Comau or Teksid subsidiaries, both of which are smaller but also of less strategic importance. Magneti Marelli is a key supplier now for Fiat brands and also supplies parts for former Chrysler vehicles.

Cutting FCA’s debt would provide greater profits on the same revenues through lower debt payments, and may allow for better refinancing rates.

 


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