STLA Stellantis NV

By Sean McLain 

This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (October 23, 2018).

TOKYO -- An auto parts maker owned by American buyout firm KKR & Co. said it is acquiring Fiat Chrysler Automobiles NV's auto parts arm, Magneti Marelli, for EUR6.2 billion ($7.1 billion), a deal that will catapult the combined company into the top ranks of global auto suppliers.

The combination of KKR-owned Calsonic Kansei, which is based in Japan, and Magneti Marelli of Italy will create a company with EUR15.2 billion in annual revenue. That may help increase the chances of survival in an auto-parts industry increasingly dominated by behemoths like Robert Bosch GmbH, Denso Corp. and Magna International Inc.

Those larger companies are better able to funnel research dollars into next-generation technologies, such as self-driving and internet-connected vehicles. Bosch had sales of EUR78.1 billion in 2017 and spent EUR7.2 billion on research and development.

The new company also will have a broader customer base after the deal. Calsonic Kansei gets the majority of its business from Nissan Motor Co., with which it has a long history. Magneti Marelli is a subsidiary of Fiat Chrysler and relies on the group for about a third of its business, according to Fiat Chrysler's last annual filing.

KKR announced its acquisition of Calsonic Kansei in 2016 and completed it the next year. The Japanese company makes heating and air conditioning systems and components for Nissan's electric vehicles. Magneti Marelli makes headlights and electronic components among other parts.

In August, The Wall Street Journal reported that KKR was in talks to acquire Magneti Marelli, citing people familiar with the matter.

New Fiat Chrysler Chief Executive Mike Manley, who replaced the late Sergio Marchionne, has inherited Mr. Marchionne's push to boost profitability at the auto maker.

Calsonic Kansei Chief Executive Beda Bolzenius will lead the new firm, to be called Magneti Marelli CK Holdings. Magneti Marelli CEO Ermanno Ferrari will join the board of the new company.

Write to Sean McLain at sean.mclain@wsj.com

(END) Dow Jones Newswires

October 23, 2018 02:47 ET (06:47 GMT)

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