Samsung Electronics is in advanced talks to buy some or all of the operations of auto-parts maker Magneti Marelli from Fiat Chrysler, according to sources.
Samsung is particularly interested in Magneti Marelli’s lighting, in-car entertainment and telematics business and could consider an acquisition of the whole company, the souces said.
The deal could be worth more than $3bn (€2.67bn), with a goal of closing this year. That would make it Samsung’s biggest-ever acquisition outside South Korea. Fiat’s shares rose over 8% on the news.
A move into automobile components would help lower Samsung’s reliance on consumer electronics. Vice chairman Lee Jae Yong, 48, is reshaping South Korea’s biggest company as he takes on more responsibilities once held by his father.
He has sold off assets and narrowed the conglomerate’s scope as he seeks to bounce back from a downturn in the smartphone business.
Mr Lee, who has been a director of Fiat Chrysler’s controlling shareholder Exor since 2012, would also position his company to benefit from the rising interest in cars from technology companies.
Apple, Baidu and Google are pushing into automobiles, seeking to deploy their technology into new areas as cars become more advanced. Samsung had more than $70bn of cash and marketable securities as of March 31.
In addition to global leadership in smartphones, Samsung is the world’s biggest producer of memory chips and televisions. Fiat’s shares have nonethless lost 31%, compared with an 18% decline in the Stoxx Europe 600 Automotive and Parts Price Index.
News of the talks also lifted shares of Sogefi, another Italian parts maker that has attracted interest from private equity firms.
The first major carmaker to strike a deal with Google on driverless vehicles, the company is in discussions with other technology companies, chief executive officer Sergio Marchionne said on a conference call after the company’s second-quarter earnings results last month.
After calling off efforts to pursue a merger with General Motors, Mr Marchionne has made eliminating debt his highest priority before he leaves the post in 2019.
Achieving the goal would put Fiat Chrysler in a better position to find a partner. Mr Marchionne contends that the auto industry wastes too much money and needs to consolidate to finance investment in new technology.
“It makes sense for a manufacturer to separate and crystallise value from their components business,” said George Galliers, an analyst at Evercore ISI.
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