South Korea’s Samsung Electronics Co. is reportedly in talks to buy the auto components unit of Italy’s Fiat Chrysler Automobiles N.V. (FCA). According to multiple sources from the electronics industry and foreign media outlets, Samsung Electronics has embarked on the process of acquiring auto-parts maker Magneti Marelli from FCA.

Magneti Marelli, founded in 1919, is headquartered in Corbetta, in Milan, Italy. Last year, the company with 40,500 employees raised 7.3 billion euro in sales. It produces automotive application components such as power trains that control gasoline and diesel engines and vehicle infotainment and telematics systems, as well as automotive lighting including light emitting diodes (LEDs) and suspensions.

Samsung Electronics is known to be particularly interested in acquiring Magneti Marelli’s automotive application component business although it is open to purchasing the whole company if necessary.

According to Bloomberg on Wednesday, the purchasing price could reach $3 billion or more and the deal could be concluded this year if talks proceed well. If successful, it would make the biggest-ever overseas acquisition by Samsung Electronics.

At 1:05 p.m., Samsung Electronics shares were up 0.7 percent or 10,000 won to 1,527,000.

Samsung Electronics, which declined to comment on the matter, late last year established automotive business team under the head of Vice Chairman Kwon Oh-hyun who oversees the electronics giant’s device solution (DS) division.

The world’s largest memory chip and smartphone maker has become keen in automotive electronics - pivotal in electric and self-piloting vehicles - under the helm of Vice Chairman Jay Y. Lee who has taken control over the Samsung empire on behalf of his bedridden father Lee Kun-hee.

Lee has close association with FCA, having served as an outside director of Exor S.p.A., an Italian investment company and the controlling shareholder of FCA and Ferrari, since 2012.

Exor is owned by the Agnelli family, an influential business dynasty in Italy that founded automaker Fiat. The company is chaired by John Elkann, the grandson of the late Giovanni Agnelli who founded Exor. The younger Lee is a close acquaintance of Elkann. When the Italian chairman visited Korea in 2010, Lee invited him to the Samsung headquarters in Seocho-dong, southern Seoul, for a meal.

Also, in May, when Lee attended the board of directors meeting of Exor, he met with senior FCA officials and discussed FCA’s possible partnership with Samsung. Observers note that specific measures on acquiring Magneti Marelli could have come out around that time.

The automotive application business Samsung Electronics is interested in mainly engages infotainment and self-driving systems. Infotainment system includes telematics, navigations, and media players that allow the use of communication functions inside a vehicle. Samsung Electronics is expected to eventually develop and make components related to self-driving vehicle technology. It aims to nurture the automotive application business into a core business area for the future.

By Lee Seung-hoon

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