Fiat-Chrysler shares jump nearly 4% as Magneti Marelli spinoff appears more likely
- Fiat-Chrysler will stick to its plan to spin off its Magneti Marelli parts division, Bloomberg reported.
- The company had entertained interest from an unnamed Asian parts supplier, as well as interest from Apollo Global Management and Bain Capital, the report said.
Fiat-Chrysler Automobiles has rebuffed buyers interested in its automotive parts unit Magneti Marelli and is holding fast to its plan to spin off the business, reported Bloomberg Thursday, citing sources.
The news comes a day after Magneti Marelli said it plans to buy French startup StartMeUp, which makes software for self-driving cars. Magneti Marelli may be worth as much as $7 billion, Bloomberg said.
Shares closed up nearly 4 percent Thursday.
The report said the company had considered offers from an unnamed Asian parts supplier and Apollo Global Management and Bain Capital also have expressed interest, sources told Bloomberg.
Earlier this year, FCA said it would spin off the Magneti Marelli business and distribute shares of a new holding company to FCA shareholders. The move is subject to final approval by the FCA board and shareholders.
"In the meantime, as the Company has previously indicated, it will evaluate bona fide proposals for alternative transactions that may be in the best interest of the Company, its shareholders and all stakeholders," said FCA spokesman Shawn Morgan, in statement sent to CNBC. "The Company does not intend to comment on market rumors with respect to any such proposals."
A decision on what to do with the Magneti Marelli business may be one of the first moves made by new CEO Mike Manley.
Manley, formerly head of the company's Jeep business, took over for the late CEO Sergio Marchionne at the end of July. Marchionne was forced to resign after complications from surgery and died soon after, rather unexpectedly, after a battle with illness that was largely unknown to the public. FCA said it had not known about Marchionne's failing health.
The spin-off plan was for months known to be part of Marchionne's strategy to focus Fiat-Chrysler's efforts on its core businesses, and allow Magneti Marelli to grow. It was considered to be a "key ingredient" of FCA's 2018-2022 Business Plan, which Marchionne discussed in detail in June. On Marchionne's watch, FCA spun out legendary sports car maker Ferrari. Marchionne had also at one point had said he would consider spinning out Fiat-Chrysler's Jeep and RAM Truck brands as well.