As Sergio Marchionne, CEO of Fiat Chrysler Automobiles (FCA) which is reportedly in talks to sell its auto components unit to Samsung Electronics, mentioned Korean tech conglomerate as a potential partner, all eyes are on whether the negotiation for the takeover will be concluded soon.
According to industry sources on August 28, Marchionne said in a recent interview with Bloomberg TV, “We have a very good relationship with Samsung as a supplier and potential strategic partner.” During the interview, he hinted that there is a possibility that company could partner with Samsung in the future. He also added, “We also have a good relationship with Samsung Electronics Vice Chairman Lee Jae-yong, an outside director of Exor.”
Marchionne had no specific comment on whether FCA is in talks over the takeover with Samsung Electronics. However, he said in an interview on the 26th, “Several companies which intend to acquire Magneti Marelli have contacted us and we will get an answer shortly.” It implies that there has been progress in the negotiations and FCA is about to make a final decision.
Samsung Electronics, which has jumped in the automotive component market in earnest by establishing its automotive electric component business team last year, is seeking to buy FCA’s parts making subsidiary Magneti Marelli. The company is reportedly interested in mainly Magneti Marelli’s lighting, in-car entertainment and telematics business.
Recently, there has been a rumor that Samsung has stopped negotiations to take over Magneti Marelli. However, many market watchers say that it is not something Samsung would miss easily since it is hard to get such a deal and there are high entry barriers in the component business. Currently, FCA has also put the debt reduction at the top of its agenda after the merger talks with General Motors Co. broke down. Selling off over Magneti Marelli could greatly help reduce the company’s debt. Industry watchers expect that the deal could be worth more than US$3 billion (3.35 trillion won).