Fiat Chrysler Automobiles sells Magneti Marelli to CK Holdings for EUR6.2 billion

Magneti Marelli S.p.A., the high-end maker of automotive parts and components, will be soon own by a Japanese company. This comes as it current owner, Fiat Chrysler Automobiles has inked an agreement to sell Magneti Marelli to CK Holdings Co., Ltd. – holding company of Calsonic Kansei Corp. -- for around EUR6.2 billion. The companies expect to close the transaction in the first half of 2019, as subject to regulatory approvals as well as customary closing conditions.

The acquisition of Magneti Marelli by CK Holdings will lead to the Italian company’s combination with Calsonic Kansei, which is also a manufacturer of automotive components that does its business in Japan. Once combined, the merged Magneti Marelli and Calsonic Kansei will be operating under a new name -- Magneti Marelli CK Holdings. Nonetheless, this new legal entity name remains subject to approval of shareholders. The combination of the operations and business of Magneti Marelli and Calsonic Kansei will make the Magneti Marelli CK Holdings the seventh largest independent automotive components supplier in the world, as based on total revenues. Magneti Marelli and Calsonic Kansei have combined revenues of EUR 15.2 billion (JPY1,975 billion).

Posting consolidated revenues of EUR7.7 billion (JPY 998 billion1) in the fiscal year ended March 2018, Calsonic Kansei is involved in the production of thermal products, exhaust systems, electronics and automotive interiors. Based in Saitama, Japan, Calsonic Kansei is a wholly owned portfolio company of KKR has recently celebrated its 80th year in existence.

On the other hand, Magneti Marelli specializes in powertrain systems as well as intelligent systems for active and passive vehicle safety. It is also involved in automotive lighting systems, powertrain control systems, electronic instrument clusters, body control systems, and telematics systems. Magneti Marelli also develops suspension systems and components, as well as exhaust systems. Based in Corbetta, Italy, Magneti Marelli operates 86 manufacturing site, 12 R&D centers and 26 application centers in 19 countries around the around. It has been a subsidiary of FCA since 1967.

According to the companies, the combination of these two successful businesses represents a decisive step towards their strategic ambition to become a leading globally diversified tier-one automotive supplier.

Once it commences operations as a combined company, Magneti Marelli CK Holdings will be able to take advantage of its enhanced scale, financial strength as well as geographic footprint to be in better position serve its customers around the world. As combined, Magneti Marelli CK Holdings will have around 200 facilities as well as R&D centers not just in Europe and Japan, but also in the Americas and Asia Pacific.

When Magneti Marelli CK Holdings becomes legal and official as a new company, it will be based in Japan and will be headed by the current chief executive of Calsonic Kansei, Beda Bolzenius. The current CEO of of Magneti Marelli, Ermanno Ferrari, will become a member of the board of the Magneti Marelli CK Holdings.

PRESS RELEASE

FCA sells Magneti Marelli

Fiat Chrysler Automobiles N.V. (“FCA”) (NYSE: FCAU/MTA: FCA) announces that it has entered into a definitive agreement (the “Transaction”) to sell its automotive components business Magneti Marelli S.p.A. (“Magneti Marelli”) to CK Holdings Co., Ltd. (“CK Holdings”), a holding company of Calsonic Kansei Corporation (“Calsonic Kansei”), a leading Japanese automotive component supplier. Following the closing of the Transaction, CK Holdings will be renamed as Magneti Marelli CK Holdings*. The combined businesses of Calsonic Kansei and Magneti Marelli will create the world’s 7th largest global independent automotive components supplier based on total revenues.

The agreement represents a transaction value of EUR 6.2 billion. The Transaction is expected to close in the first half of 2019 and is subject to regulatory approvals and other customary closing conditions.

The Transaction represents a unique opportunity to combine two successful businesses to create one of the leading global independent automotive components suppliers, with combined revenues of EUR 15.2 billion (JPY 1,975 billion1). The combination is a decisive step towards both companies’ strategic ambition to become a leading globally-diversified tier-one supplier.

The combined company will 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 centers across Europe, Japan, the Americas, and Asia Pacific.

* The legal entity name is subject to shareholder approval.
[1] Exchange rate: EUR 1/ JPY 130

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.

The combined company will be led by Beda Bolzenius, currently CEO of Calsonic Kansei, based in Japan. Ermanno Ferrari, CEO of Magneti Marelli, will join the Magneti Marelli CK Holdings* board.

Commenting on the transaction, Mike Manley, CEO of FCA, said: “Having carefully examined a range of options to enable Magneti Marelli to express its full potential in the next phase of its development, this combination with Calsonic Kansei has emerged as an ideal opportunity to accelerate Magneti Marelli’s future growth for the benefit of its customers and its outstanding people. 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. The transaction also recognises the full strategic value of Magneti Marelli and is another important step in our relentless focus on value creation.”

Beda Bolzenius, CEO of Calsonic Kansei, said: “Our industry has gone through fierce change in recent years and the phase to come will be even more dynamic. 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. 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.”

Ermanno Ferrari, CEO of Magneti Marelli, said: “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. 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."

About Calsonic Kansei
Calsonic Kansei is a global manufacturer of a comprehensive product line of auto parts specializing in thermal products, exhaust systems, interiors and electronics. A wholly owned portfolio company of KKR, Calsonic Kansei is headquartered in Saitama, Japan and has recently celebrated its 80th anniversary. It delivered consolidated revenues of EUR 7.7 billion (or JPY 998 billion1) for fiscal year 2017, which ended March 2018.