November 25, 2024

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[THE INVESTOR] The rumor that Samsung Electronics might purchase Italian auto parts maker Magneti Marelli is unlikely to come true, said the head of Fiat Chrysler Automobiles’ operation in Seoul, citing the carmaker’s debt reduction plan, which is nearing its end, and a lack of correlation between the business strategies of the two companies.

Market rumors had spread fast after a Bloomberg report last year said the South Korean tech giant was in private talks with FCA to buy its affiliate Magneti Marelli. The FCA holds a 100 percent share in Magneti Marelli, one of its three components businesses.

In an interview with The Korea Herald, FCA Korea President Pablo Rosso highlighted a comment made by Sergio Marchionne, the CEO of the world’s seventh-largest carmaker, on April 26. He had said that the company was on track to reach its goal of 4.5 billion euros ($4.92 billion) to 5 billion euros in cash by 2018 and that this would be accomplished without selling any of its assets.

“Speculation regarding us selling Magneti Marelli, our assets, comes from the facts that we are going to reduce our debts to a certain level by the end of 2018. And people think we are going to reduce debts by selling assets and that is why there are rumors,” Rosso said.

“Marchionne said we are going to achieve that target without selling assets. In my opinion, we are not going to sell it not only because he expressed (his plan), but also because we see the numbers of (how) Magneti Marelli is doing, and it is ridiculous to sell it,” he said, adding that this was his personal opinion.

Samsung has been denying reports about its alleged intention to buy Magneti Marelli. The company bought US automaker Harman for 10 trillion won (US$8.8 billion) late last year. But the possible deal between Samsung and the FCA was brought up based on the speculation that the tech giant was flexing its muscle to re-enter the automotive market it left 17 years ago.

Samsung was said to be interested in Magneti Marelli’s entertainment, lighting and telematics technology.

But Rosso played down the prospects, saying that Samsung’s goal had no connection to Magneti Marelli’s business.

“I don’t see Samsung buying that kind of company. I don’t see (that) there’s a link between Samsung strategy and Magneti Marelli.”

Magneti Marelli, a producer of advanced auto systems and components, saw its revenue reach 7.3 billion euros in 2015, according to reports.

At the Consumer Electronics Show in January, the company emphasized autonomous driving and high-resolution on-board display.

By Cho Chung-un/The Korea Herald (christory@heraldcorp.com)