Fiat Chrysler Automobiles is in the midst of a leadership crisis as its longtime CEO Sergio Marchionne struggles to recover from surgery. But with his successors now taking their places on both sides of the Atlantic, business will have to proceed as usual sooner or later. And when it does, that looks slated to include spinning off one of its biggest units.
According to Reuters, FCA was already gearing up to separate Magneti Marelli into a separate entity before Marchionne’s health threw the company into crisis. The news outlet reports having seen documents showing the creation of a new entity called MM Srl, ostensibly paving the way towards the division’s spin-off.
The electronics and electrical-component division has been under the Fiat umbrella since its acquisition way back in 1967. The operation encompasses some 43,000 employees at over a hundred facilities in 19 countries around the world. It’s been touted as the subject for a potential sale or spin-off for several years, with talks between FCA and Samsung having taken place (but ultimately collapsed) just two years ago.
Now it appears that FCA is preparing to spin Magneti Marelli off into its own unit, register it in the Netherlands, and potentially list its stock on the open exchange. It wouldn’t be the first time that FCA would undertake such a move, after all, having done the same with Ferrari and CNH Industrial in recent years.
Reuters values Magneti Marelli at around $5 billion. Some of the proceeds from its Initial Public Offering would return to FCA’s current stakeholders – particularly the Agnelli/Elkann family which, through its Exor holding company, owns over 29 percent of FCA (as well as nearly 27 percent of CNH and 23 percent of Ferrari).
The question at this point may come down to when Marchionne’s successors will move to complete the spin-off in his absence.