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As it did with Ferrari, Fiat Chrysler spinning off Magneti Marelli

MILAN — Fiat Chrysler said on Thursday its board had tasked management to proceed with spinning off Magneti Marelli and distributing shares in a new holding for the 99-year old parts business to FCA investors. The spinoff is part of a plan by FCA Chief Executive Sergio Marchionne to "purify" the Italian-American carmaker's portfolio and to unlock value at Magneti Marelli, which sits within FCA's components unit alongside robotics specialist Comau and castings firm Teksid, and which analysts say could be worth between 3.6 and 5 billion euros ($4.4-6.1 billion). "The separation will deliver value to FCA shareholders, while providing the operational flexibility necessary for Magneti Marelli's strategic growth in the coming years," Marchionne said in a statement. Magneti Marelli, which employs around 43,000 people and operates in 19 countries, is a diversified components supplier specialized in lighting, powertrain and electronics, and its spinoff is part of a five-year business plan FCA is due to present on June 1. "The spinoff will also allow FCA to further focus on its core portfolio while at the same time improving its capital position," Marchionne added. Marchionne has a long history of such moves. The 65-year-old was behind the spinoff and listing of trucks and tractor maker CNH Industrial and supercar brand Ferrari. The Magneti Marelli separation is expected to be completed by the end of this year or early 2019, with shares in the company expected to be listed on the Milan stock exchange. FCA's advisers initially looked at a possible initial public offering for the business to raise cash to cut FCA's debt, but the Agnelli family - FCA's main shareholder - were put off by low industry valuations and did not want their stake in Magneti Marelli to be diluted, three sources close to the matter told Reuters last month. Magneti Marelli has often been touted as a takeover target and FCA has fielded interest from various rivals and private equity firms over the years. South Korea's Samsung Electronics made a bid approach in 2016 but negotiations fell through as it was only interested in parts of the business, other sources have said. The spinoff is subject to regulatory approvals, tax and legal considerations and a final approval by the FCA board. The carmaker may modify or call off the transaction at any time and for any reason, it added.

For his last act, Marchionne will outline an EV/hybrid roadmap this week

MILAN/LONDON — Fiat Chrysler (FCA) boss Sergio Marchionne is expected to outline new plans for electric and hybrid cars in a strategy presentation on Friday, aiming to ensure the world's seventh-largest carmaker remains in the race in the absence of a merger. The 65-year-old will present FCA's strategy to 2022, his final contribution to the company he turned around and multiplied in value through 14 years of canny dealmaking. After failing to secure a tie-up he said was necessary to manage the costs of producing cleaner vehicles, Marchionne needs to show the group can keep churning out profits on its own, even as emissions rules tighten, SUV competition intensifies and worries around his succession abound. Marchionne had long refused to jump on the electrification bandwagon, saying he would only do so if selling battery-powered cars could be done at a profit. He even urged customers not to buy FCA's Fiat 500e, its only battery-powered model, because he was losing money on each sold. But Tesla's success and the need to comply with tougher emissions rules have forced Marchionne to commit to what he calls "most painful" spending. "FCA is way behind rivals in terms of hybrid and electric vehicles and they need to hit the accelerator to convince investors they can close that gap," said Andrea Pastorelli, a fund manager at 8a+ Investimenti. Germany's Volkswagen, Daimler, BMW and U.S. rivals GM and Ford have committed to spending billions of euros each in coming years to try produce profitable cars powered by cleaner fuels. FCA needs to present a clear roadmap, just like Volvo Cars, which ditched diesel from its best-selling XC60 SUV, launched a new electric brand and pledged to shift all brands to hybrid by 2019, a banking source close to FCA said, noting: "The tech divide determines winners and losers in the industry." Marchionne has already said half of the wider FCA fleet will incorporate some elements of electrification by 2022, while luxury marque Maserati will spearhead FCA's electrification drive by making all new models due after 2019 electric. But its plans remain vaguer and less advanced than most big rivals and some investors wonder about the capital required to make vehicles compliant, and what share of spending can go to electrification given FCA's numerous demands.

The Hemi deserves to die | Opinion

Hi. I'm Byron and I love V8s. I want them to stick around for a long, long time. But not all V8s are created equal, and I will not mourn the passing of the modern Hemi. You shouldn't either. While we may agree that its death is untimely, if you ask me, that's only because it came far too late.  Stellantis’ announcement of its new, turbocharged inline-six that is all but guaranteed to kill off the Hemi V8 has led to quite a few half-baked internet takes. The notion being suggested by some, that automotive media were brainwashed into believing the Hemi was in need of replacement, is so far divorced from reality that I openly guffawed at the notion. Journalists have been challenging Chrysler, FCA and now Stellantis for years to deliver better high-performance engines. The response has always been the same: “Why?” Why replace a heavy V8 with a lighter, all-aluminum one? Why repackage powertrains for smaller footprints and better handling vehicles? Why be better when “good enough” sells really, really well? I too mourn the departure of good gasoline-burning engines, but since when was the Hemi one? HereÂ’s a quiz: Name every SRT model with an all-aluminum engine. TimeÂ’s up. If you named any, you failed. They donÂ’t exist. This isnÂ’t GMÂ’s compact, lightweight small-block, nor is it a DOHC Ford Coyote that at least revs high enough to justify its larger footprint. The Hemi is an overweight marketing exercise that happened to be in the right place at the right time. That time was 2003, when Chrysler was still Chrysler — except it was Daimler-Chrysler and the "merger of equals" was doing a bang-up job of bleeding the company's cash reserves dry while doing virtually nothing to address its mounting legacy costs. "That thang got a Hemi?" was emblematic of the whimsical, nostalgia-driven marketing of the colonial half of the "marriage made in heaven." That was 20 years ago. 20 years prior to that, emissions-choked American V8s were circling the drain faster than a soapy five-carat engagement ring in a truck stop sink.