Fiat Chrysler is to sell its automotive components business, Magneti Marelli to CK Holdings for EUR6.2bn (US$7.1bn).

CK Holdings is a subsidiary of Japanese component supplier, Calsonic Kansei and following the closing of the transaction, CK Holdings will be renamed Magneti Marelli CK Holdings.

The combined businesses of Calsonic Kansei and Magneti Marelli will create the world’s seventh largest global independent automotive components supplier based on total revenues. The transaction is expected to close in the first half of 2019. It is subject to regulatory approvals and other customary closing conditions and the two businesses will have combined revenues of EUR15.2bn.

The new entity will operate out of nearly 200 facilities and R&D centres across Europe, Japan, the Americas, and Asia Pacific. FCA has also agreed to a multi-year Supply Agreement.

The combined company will be led by Beda Bolzenius, currently Calsonic Kansei CEO, based in Japan. Ermanno Ferrari, CEO of Magneti Marelli, will join the Magneti Marelli CK Holdings board.

“Having examined a range of options to enable Magneti Marelli to express its full potential in the next phase of its development, this combination with Calsonic Kansei has emerged as an opportunity to accelerate Magneti Marelli’s future growth for the benefit of its customers and its people,” said FCA CEO, Mike Manley.

“The combined business will continue to be among FCA’s most important business partners and we would like to see that relationship grow even further in the future.

“The transaction also recognises the full value of Magneti Marelli and is another important step in our focus on value creation.”

For his part, Bolzenius added: “Our industry has gone through fierce change in recent years and the phase to come will be more dynamic. It is exciting to form a strong platform for Calsonic Kansei and Magneti Marelli to work together and create a competitive automotive supplier, which is well placed among the global Top Ten.

“Together, we will benefit from complementary geographic footprints and product lines, while our respective customers will benefit from an increased investment in people, processes and new products.”