Fiat Chrysler Automobiles NV (IW 1000/26) Chief Executive Officer Sergio Marchionne is looking into a tie-up with Samsung Electronics Co., as the Italian-American company widens its search for a technology partner to gird against being left behind in the race to develop self-driving cars.
Marchionne, who dropped his push for a merger with a fellow automaker last year, has increasingly turned his intention to technology providers. In March, he offered to assemble cars for Apple Inc. and in May announced a cooperation project with Alphabet Inc.’s Google on driverless vehicles. Amid discussions with Uber Technologies Inc. and Amazon Inc., Samsung is the latest big-name technology company on Fiat’s radar.
“We have a very good relationship with Samsung, both as a supplier and as a potential strategic partner,” Marchionne said late Saturday in an interview with Bloomberg Television in Rome. “I happen to have a good relationship” with Samsung Electronics Vice Chairman Lee Jae Yong because both serve on the board of Exor SpA, Fiat Chrysler’s biggest shareholder.
As previouly reported, Samsung is advanced talks about buying some or all of Fiat’s car-parts unit Magneti Marelli, people familiar with the matter said earlier this month. While Marchionne declined to comment on whether Samsung is a suitor, he looks to be positioning the division as a carrot to woo a partner, noting that Magneti Marelli had drawn the interest of several potential buyers.
“Marchionne is trying to pass the message that he is not interested in a straight sale” of the parts business, but instead wants to “use Marelli as a common platform to develop self-driving cars with Samsung,” Massimo Vecchio, a Milan-based analyst for Mediobanca, said in a note.
Magneti Marelli's Strategic Value
Marchionne said that Magneti Marelli has “strategic value” and “is going to provide a significant platform for technology development” for the owner of the Jeep, Maserati and Alfa Romeo brands. Magneti Marelli is part of Fiat’s components division, which also includes metal-parts manufacturer Teksid and Comau, which makes robots and automation equipment.
Samsung is particularly interested in Magneti Marelli’s lighting, in-car entertainment and telematics business, the people said, asking not to be identified because the discussions are private. Marchionne will have the chance to meet Lee on Monday, when the Exor board is scheduled to review the investment company’s second-quarter earnings.
The talks between Fiat and Samsung on a deal have slowed recently over differences about the valuation of the businesses, South Korea’s Maeil Business Newspaper reported Aug. 25. Lee is set to discuss a Magneti Marelli deal with Marchionne when the Samsung executive visits Europe for the Exor board session, it reported.
Fiat Chrysler shares dropped 2% to 6.04 euros at 12:14 p.m. in Milan. Samsung rose 1.7% in South Korea.
A partnership with a technology company has taken on added importance for Marchionne after his efforts to merge with General Motors Co. were rebuffed. Fiat Chrysler is particularly exposed to changes in the auto market because of its small size compared to the likes of GM, Volkswagen AG and Toyota Motor Corp.
A sale of some or all of Magneti Marelli would also help Marchionne, 64, achieve his goal of eliminating Fiat’s debt before he retires from the CEO post by 2019. Still, decisions over the future of Magneti Marelli “won’t happen overnight,” Marchionne said.
By Tommaso Ebhardt and Flavia Rotondi