Samsung considers buying Fiat's auto parts unit

By Kim Yoo-chul

Samsung Electronics is considering acquiring either some or all of Fiat Chrysler Group’s auto parts unit ― Magneti Marelli ― in a bid to bolster its presence in the promising in-vehicle parts business, sources said late Wednesday.

According to the sources, Samsung Electronics has keen interests in Magneti Marelli’s lighting, in-car entertainment and telematics business in accordance with its next business strategy to grow non-consumer businesses.

The deal, if realized, is estimated to be worth up to $3 billion, said the sources, adding the two parties hope to close the deal by the end of the year. This will also be Samsung’s biggest overseas acquisition after the company dropped its $4 billion bid to acquire U.S.-based flash memory designer SanDisk.

A Samsung spokesman in Seoul declined to comment.

But the sources said given Samsung’s strengths in parts from displays, sensors to semiconductors, all of which are used in connected vehicles, Samsung’s approach to Fiat-owned assets looks plausible.

Last year, Samsung Electronics established a team of experienced technicians and engineers sourced from other Samsung technology affiliates to effectively manage its car parts-related businesses.

With most Silicon Valley-based technology leaders, including Google and Apple, developing technologies for driverless autonomous electric vehicles, Samsung is following suit by partnering with global carmakers and acquiring some stakes in them. It recently invested 510 billion won to purchase stakes in China’s BYD, the world’s biggest electric vehicle manufacturer.

On a related note, Samsung also forged an alliance with SEAT, part of the Volkswagen Group, and software company SAP to showcase the latest concepts in the high-tech auto industry.

Samsung Electronics de-facto leader of Samsung Group Vice Chairman Lee Jae-yong has been a member of the external board committee of Exor, the holding arm of Fiat Chrysler Group, since 2012.

The sources said Samsung’s top management is impressed to see expanded sales and distribution channels owned by Magneti Marelli as the group still has no plan to advance into the car-manufacturing business segment.

“Samsung Electronics doesn’t want to compete with global carmakers. What the company wants is to sell its in-vehicle parts to leading carmakers using existing channels and to prepare for the post-smartphone era,” a senior fund manager from a U.S.-based investment bank in Seoul, said.

Magneti Marelli is headquartered in Milan, Italy. It has 19 operations globally and 40,500 employees. It also has operations in Korea.

Magneti Marelli is also one of the top clients of Samsung Display. In 2009, the latter agreed to supply displays for car dashboards to the Italian company.