* Sinomach, Simee also interested in Comau - source
* FCA focusing first on deal for Magneti Marelli - sources
* Auto parts sales could help FCA cut debt, fund investment
By Pamela Barbaglia, Agnieszka Flak and Arno Schuetze
LONDON/MILAN/FRANKFURT, Oct 6 Chinese firms
including Shanghai Electric have approached Fiat
Chrysler Automobiles (FCA) to express an interest in
buying its Comau robotics business, sources familiar with the
matter told Reuters.
Any deal would follow a wave of European acquisitions by
Chinese firms as they seek global scale and could help FCA pay
down debt as well as fund an expensive investment plan.
Chinese conglomerate Sinomach and Shanghai
Institute of Mechanical and Electrical Engineering (Simee) have
also approached FCA over a possible bid for Comau,
hoping to persuade FCA boss Sergio Marchionne to sell the
Turin-based specialist in welding robots, one of the sources
But FCA is currently focused on talks over a potential sale
or partnership for its Magneti Marelli auto parts maker with
South Korea's Samsung Electronics and is in no rush
to consider options for Comau, a profitable unit with revenues
of just under 2 billion euros ($2.3 billion), the sources added.
FCA declined to comment, while Shanghai Electric, Sinomach
and Simee were not immediately available to comment due to a
national holiday in China.
The world's seventh-largest carmaker has one of the highest
debt piles in the industry and needs cash to fund an ambitious
48 billion euro investment plan, especially after Marchionne's
proposal to tie up with U.S. rival General Motors was
FCA chairman John Elkann said on Sept. 3 that FCA was in
talks with several parties, including Samsung, and reviewing
options for Magneti Marelli.
A deal could be worth up to 4 billion euros depending
whether Samsung buys all or part of Magneti Marelli, which makes
components for lighting, engines, electronics, suspension and
exhausts, among other items, the sources said.
If successful, the sale of Magneti Marelli could pave the
way to other disposals within FCA's auto parts division, which
also includes Comau and castings firm Teksid, the sources said.
Discussions between Samsung and FCA have been going on since
the start of the summer but the two parties remain far from an
agreement, the sources said. In fact, they have yet to hire
banks to help negotiate the terms of a deal, they added.
Samsung is only interested in certain parts of Magneti
Marelli and the two companies may initially set up a partnership
that could later evolve into a sale, they said.
A Samsung spokesman declined to comment.
Comau is Fiat's second biggest components business, with
adjusted operating profit of 72 million euros in 2015.
The unit, which employs 12,600 people in 17 countries, has
also drawn interest from private equity funds, the sources said,
cautioning no deal was certain.
Comau, led by chief executive Mauro Fenzi, supplies process
automation products to several FCA brands, including Chrysler,
and its operations are intertwined with the rest of the group,
making it hard to hive it off, the sources said.
A partnership with one of the Chinese suitors is seen as a
better option for FCA, one source said, although the Chinese
bidders have mainly shown interest in a full acquisition.
Meanwhile, some private equity funds including U.S. buyout
firm Marlin Equity Partners have set their sights on Teksid, the
smallest of FCA's auto parts units with 2015 revenues of 631
million euros and an adjusted operating profit of 2 million
euros, one of the sources said.
But FCA is keeping buyout funds at arm's lengths, the
sources said, and there are no talks underway.
A spokesman at Marlin Equity Partners was not immediately
available for comment.
A sale of any of the units could help FCA pay off some debt
at a time when it is highly exposed to a peaking U.S. auto
market and its five-year investment plan is plagued by product
Chinese firms and other international automotive players are
better positioned to buy FCA's auto parts units than private
equity funds since Marchionne is wary of selling assets to
financial investors and recently rebuffed bids from heavyweight
funds for Magneti Marelli, the sources said.
Aviation Industry of China (Avic) could also
make a move for FCA's units, particularly Comau, the sources
said, as it seeks access to proprietary technology. Avic
representatives could not be immediately reached for comment.
Chinese firms have shown growing interest in European
automotive assets as they look to boost their global presence,
with Chinese household appliances company Midea Group recently
buying industrial robot maker Kuka.
China's voracious appetite for overseas acquisitions has
propelled Asia to the forefront of global deal-making for the
first time, with investment bankers hoping Chinese buyers will
continue to support an otherwise slowing M&A market.
Last year, state-backed ChemChina bought a majority of
Italy's Pirelli, the world's fifth-largest tyre maker. It then
bought Swiss seeds and pesticides group Syngenta for
$43 billion in February, the largest Chinese deal this year.
($1 = 0.8924 euros)
(Addintional reporting by Vincent Lee, Norihiko Shirouzu and
Sue-Lin Wong; Editing by Mark Potter)