Fiat Chrysler Announces Sale of Magneti Marelli Parts Business for $7 Billion [News]

Magnetti Marelli has been under Fiat’s control since 1967.

Japanese auto parts manufacturer Calsonic Kansei recently agreed to buy Fiat Chrysler’s Magneti Marelli parts division for 6.2 billion euros ($7.1 billion), both companies announced today. The agreement, set to close next year, marks the first major decision under FCA’s newly-appointed CEO, Mike Manley. Manley took over as Chief Executive following the illness and death of former CEO Sergio Marchionne.

The transaction will create one of the largest automotive suppliers in the world. Together, the combined Magneti Marelli CK Holdings will generate more than 15.2 billion euros ($17.4 billion), according to the joint statement.

Magneti Marelli was originally founded in Milan, Italy in 1919. Calsonic Kansei also has a long heritage, stretching back to 1938. While both companies have been around for decades, they merge at a time where new technologies are disrupting the traditional automotive sector. Electric cars and self-driving technologies dominate advancements in the industry, and the goal for this merger is to cut costs and share technologies to drive further advances.

The sale itself, which is still subject to regulatory approval, allows Manley to invest time and resources toward FCA’s other challenges. As of late, the company has been trying to expand in the Chinese market, particularly with Jeep. A Chinese-specific Grand Commander hit the market earlier this year. The brand also accounts for 91 percent of Fiat Chrysler’s sales in China, according to an August Wall Street Journal report.

Mike Manley said of the sale, “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.”