KKR-owned Calsonic Kansei agrees $7.1b bolt-on

Combining Calsonic and Magneti Marelli will create the world’s seventh largest global independent automotive components supplier, with annual revenues of EUR15.2 billion. On completion of the deal, the holding entity KKR created for the Japanese business will be renamed Magneti Marelli CK Holdings. FCA will enter into a multi-year supply agreement with the company.

Founded in 1919, Magneti Marelli produces electronic and lighting systems, powertrain components, suspensions and shock absorbers, exhaust systems, plastic components, and modules. It has 85 production facilities and 46 R&D centers with a footprint that covers 19 countries. The company supplies all major global original equipment manufacturers but relied on FCA for 34% of its EUR8.2 billion in revenue in 2017.

FCA announced in April that it would spin out the business, reportedly prompting inquiries from a string of prospective financial and strategic buyers. The tie-up with Calsonic is expected to deliver enhanced scale and strength, while bringing together product lines and geographic footprints that are complementary.

“Our industry has gone through fierce change in recent years and the phase to come will be even more dynamic. It is exciting to form a strong platform for Calsonic Kansei and Magneti Marelli to work together and create a competitive automotive supplier which is extremely well placed among the global top 10,” said Beda Bolzenius, CEO of Calsonic, in a statement.

KKR completed its JPY498.3 billion ($4.5 billion) acquisition of the Japanese company in March of last year. The GP first agreed to buy Nissan’s 41% holding in Calsonic and then launched a tender offer for the entire business. Calsonic supplies components including vehicle interiors, climate control systems, compressors, exhaust systems, and electronic products. Nissan is by some distance its main customer, accounting for 80% of transactions.

This is not the first significant international bolt-on acquisition by a Japan-based KKR portfolio company. In 2013, KKR bought Panasonic Healthcare for JPY165 billion, telling Panasonic – which retained a 20% stake – that it could drive expansion domestically and overseas. Since then the business has doubled in size, in part due to the purchase of Bayer’s diabetes care business. In 2016, Mitsui & Co. invested at a valuation of JPY245.9 billion, enabling KKR to make a partial exit.

“We have exceeded many expectations with the company, and it is a reference point in every other meeting on the topic of carve-outs and our cross-border capabilities,” Ming Lu, head of Asian private equity at KKR, told AVCJ last year.

The Magneti Marelli deal is expected to close in the first half of 2019, pending regulatory approvals.

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• Topics
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• KKR
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• automobiles