Calsonic Buying Magneti Marelli the Fiat Chrysler Parts-Making Unit

Calsonic Kansei the maker of car parts based in Japan, and owned by KKR the U.S. based private equity firm, will acquire Magneti Marelli the high-tech parts maker of Fiat Chrysler for the price of €6.2 billion equal to $7.1 billion, said the companies on Monday.

Magneti Marelli is well known for specializing in lighting, high-tech electronics and powertrain. The new entity will create the seventh largest global independent supplier of automotive components with revenue of billions said the two companies.

The new company following the merger will be able to cut costs thanks to synergies and to expand its overall customer base.

The sale becomes the first major decision made by new CEO of FCA Mike Manley, who took the job in July after Sergio Marchionne the long-time CEO fell ill and quickly died after suffering complications following a surgery.

The maker of car parts based in Japan has been in negotiations with FCA for several months and the initial proposal was made for €5.8 billion said sources previously.

Calsonic was purchased by KKR from Nissan as well as other shareholders during 2016. At that time, it announced it would help Calsonic to make international expansion. Nissan purchased a large amount of parts worldwide from Calsonic.

This deal comes during a time when makers of components are attempting to maintain pace with the expansion of the automobile industry into cutting edge technologies such as connected cars, electric vehicles and automated driving.

The deal is expected to be completed within the first six months of 2019 and will need the approval of regulatory agencies.

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