Avoidance of Overlapping Investment
It was reported that Samsung Electronics finally gave up its takeover of Magneti Marelli, a subsidiary of Italy’s Fiat Chrysler (FCA).
According to Samsung and the automobile industry on November 24, as Samsung Electronics purchased Harman for eight million dollars of on November 15 to grow the electronic auto parts business as a future growth engine, the Korean electronics giant abandoned its plan for the acquisition of Magneti Marrelli in order to avoid overlapping investment.
Magneti Marelli is one of the world's top 30 auto parts makers producing infotainment (information + entertainment), telematics (automotive wireless Internet technology), lighting, and suspensions.
“Samsung was going to take over Haman and Magneti Marelli at the same time, but eventually buying Haman and gave up buying Magneti Marelli,” an industry watcher said. “I think it's a strategic decision that synergies are falling.
It was reported that Samsung Electronics has difficulties in price negotiations. Samsung Electronics estimated Magneti Manelli at one trillion won, but FCA demanded more than three trillion won. Samsung Electronics did not narrow down the price difference. Eventually, the Korean electronics giant finally scratched off its plan to take over Magneti Manelli. Therefore Samsung Electronics decided to take over Harman specializing in connected cars and car audio systems.
FCA also concluded that its sale negotiations with Samsung Electronics broke down, and is considering a plan to spin off and have an IPO for Magneti Manelli like Ferrari. This means that Magneti Manelli may be listed on the stock market in 2018 if the sale of Magneti Mareli suffering from a slump is not possible. Actually, in October of 2015, FCA spun off Ferrari for capital expansion and listed it on the New York Stock Exchange.
"Samsung Electronics is fostering electronics auto parts business and biotechnology as two new axes of growth," said a representative of the business world. “As Samsung vice chairman Lee is acting as an outside director of the Exor Group, there is still a possibility that the two companies will build partnership in the electronic auto parts business."