MILAN -- Fiat Chrysler Automobiles is nearing a deal to sell its high-tech car-parts unit, Magneti Marelli, to Calsonic Kansei after the Japanese firm raised its bid, according to people with knowledge of the talks.
Calsonic, an automotive supplier owned by private equity firm KKR & Co., and FCA have reached a tentative agreement on price and may announce an accord as soon as this month, said the people, who asked not to be identified as the discussions are confidential. Fiat and KKR are negotiating a valuation of more than 5.5 billion euros ($6.3 billion) including debt, they said.
The transaction could exclude small parts of Marelli's business, such as the unit that makes plastic dashboards and bumpers, the people said. Fiat was seeking bids that value all of Marelli at 6 billion euros or more, people familiar with the matter said last month. No final decisions have been made on the price or the timing of a deal, and talks could still fall apart if the two sides fail to agree on the remaining details, the people said.
Fiat may also keep its LED lighting unit, which is related to the development of autonomous driving, Corriere della Sera reported.
"The plastic business relies much on Fiat and has limited profitability," Gabriele Gambarova, an analyst at Banca Akros in Milan, wrote in a research note Wednesday. "On the contrary, the led lighting business is important."
A representative for Fiat declined to comment, as did KKR. KKR's Co-President Joseph Bae is on the board of Exor NV, which is Fiat's controlling shareholder.
A combination of the two auto parts makers would create a business with more than $17 billion in annual revenue and about 65,000 workers from Tokyo to Milan. Talks initially started months ago under former CEO Sergio Marchionne, who died in July, the people said. Fiat rejected an offer last month as the two sides were divided on the price by about 1 billion euros, people familiar with the matter said at the time.
Japanese companies have announced more than $200 billion of acquisitions this year, a 60 percent increase from the same period in 2017, according to data compiled by Bloomberg. The deal volume has already reached the highest annual tally in more than a decade, the data show.