Tokyo/Milan: Japanese car parts maker Calsonic Kansei, owned by U.S. private equity firm KKR, has agreed to buy Fiat Chrysler's high-tech parts-making unit Magneti Marelli unit for 6.2 billion euros ($7.1 billion), the companies said.
Magneti Marelli specialises in lighting, powertrain and high-tech electronics. The deal creates the world's seventh largest independent automotive components supplier with 15.2 billion euros in revenue, they said in a statement.
The agreement will allow the new entity to cut costs through synergies and expand its customer base.
The sale is the first big decision for newly minted FCA Chief Executive Mike Manley, who took over in July when long-time boss Sergio Marchionne fell ill and later died after succumbing to complications from surgery.
The Japanese car parts maker has been in talks with FCA for months and made an initial proposal of 5.8 billion euros for Magneti Marelli, sources have said previously.
KKR bought Calsonic from Nissan and other shareholders in 2016. At the time, it said it would help Calsonic, which relies on Nissan for the bulk of its global sales, to expand internationally.
The deal comes at a time when components makers are trying to keep up with the automobile sector's expansion into new technologies like automated driving, connected cars and electric vehicles.
It is expected to close in the first half of next year and is subject to regulatory approvals.