KKR Blinks First In a $7 Billion Poker Game
The buyout firm’s car parts unit has paid a hefty price for Fiat’s Magneti Marelli. It will have to work hard to justify it.
A U.S. buyout giant has agreed to pay an astonishing price for a car business.
Photographer: Bloomberg/BloombergKKR’s poker face slipped during negotiations to purchase the Magneti Marelli car parts business from Fiat Chrysler Automobiles N.V. The U.S. buyout firm’s bluff was called, and it has agreed to pay an astonishing price to prevent the company falling into rival hands.
Fiat prepared the unit for separation earlier this year, ostensibly pursuing a spin-off while indicating it was also open to a sale. A carve-out would have been possible despite increasingly unstable Italian politics, but the aversion to the country’s stocks would hardly have helped the valuation. No problem. There was enough interest from private equity to support an auction.