British car manufacturer Fiat Chrysler Automobiles NV plans to spin off its Magneti Marelli auto parts unit to its shareholders without raising money, Reuters reported March 5, citing "four sources familiar with the matter".
The report said Fiat Chrysler is looking to list the unit on the Milan stock exchange to give it more flexibility and to raise money in the future. The sources reportedly told the news wire that the company's investors will get shares in Magneti Marelli in proportion of their existing shares in Fiat Chrysler, adding that a listing will not bring any immediate benefit to Fiat Chrysler's investors.
Reuters said the company's advisers considered an initial public offering, but the company's main shareholder, the Agnelli family, disagreed due to low industry valuations and because they did not want their stake in the unit to be diluted.
The sources added that Fiat Chrysler CEO Sergio Marchionne could announce the move on June 1 when he announces his new strategy plan for the company.
Goldman Sachs, JPMorgan and firms Sullivan & Cromwell and Italy's Legance were reportedly appointed to spin off the auto parts unit.
Reuters said Fiat Chrysler, Goldman Sachs, JPMorgan and Legance declined to comment, while Sullivan & Cromwell was not immediately available for comment.
