Fiat Chrysler CEO Sergio Marchionne said he would be willing to wait for the right offer for Magneti Marelli. He'll be waiting a bit longer now.
Samsung’s proposal to purchase Magneti Marelli from Fiat Chrysler Automobiles N.V. apparently has been scrapped, according to reports circulating in the South Korean news media.
Samsung Electronics instead bid for Harman International, a major supplier of the electronics systems in cars and trucks, which superseded interest in Magneti Marelli. FCA was willing to sell the electronics unit to help raise cash and pay-down some the debt that is weighing on the company.
Samsung, according to reports last summer, was willing to pay $3 billion for Magneti Marelli and its expertise in areas such as telematics and in-car entertainment.
However, the discussions between Samsung and the Italian-American carmaker seemed to falter last summer after FCA chief executive officer Sergio Marchionne told reporters in Detroit that it a number of different offers for Magneti had emerged.
Marchionne said FCA was open to establishing a partnership between another company and Magneti Marelli. Marchionne, who has reputation for being a skillful negotiator also said he was in no hurry to make a deal.
“We would welcome the opportunity to discuss the leveraging of that know-how and the access to the customer base in a way which would benefit both FCA, Marelli and the potential partner,” Marchionne told reporters during a visit to FCA’s plant in Sterling Heights, Michigan.
(Samsung spends $8 billion to buy mobile tech giant Harman. Click Here for the story.)
Samsung is already the world's biggest maker of computer chips, but lags in auto business.
Magneti was of increasing value to FCA because it is the world’s second-largest automotive lighting manufacturer, Marchionne said.
In mid-November, however, Samsung announced plans to acquire Harman International in a deal valued at $8 billion.
The move could position Samsung as a leader in the emerging field of connected cars. It also will let it play a critical role in automotive cybersecurity, a subject of increasing concern as hackers begin to target ever more high-tech automobiles.
(Click Here to see details on FCA’s stock price rising on rumored Magneti sale.)
“We see substantial long-term growth opportunities in the auto technology market as demand for Samsung’s specialized electronic components and solutions continues to grow,” said Samsung Electronics President and Chief Strategy Officer Young Sohn.
With annual sales of around $7 billion, Harman is perhaps best known as a producer of mid and high-end in-car audio equipment, including the automotive lines of Bang & Olufsen. An estimated 30 million vehicles now are equipped with one of those systems.
In recent years, Harman has expanded beyond entertainment systems into a variety of other areas. It has acquired several Israeli firms that are targeting other areas of automotive – as well as non-automotive – technology.
(Investors betting big on autonomous technology. Click Here for the story.)
Redbend, for example, is a leader in the growing field of over-the-air, or OTA updates. That is commonly used by smartphone companies, for example, to send operating system updates. Most automakers plan to make similar moves in the future to update increasingly complex in-vehicle software.