After Samsung Electronics Co’s success in selling components for rivals’ smartphones, vice chairman Lee Jae-yong is considering a similar strategy for the world of cars.
Samsung is in advanced talks to buy assets of auto-parts maker Magneti Marelli from Fiat Chrysler Automobiles NV, according to people familiar with the matter.
It is particularly interested in the lighting, in-car entertainment and telematics business and could consider an acquisition of the whole company, the people said, asking not to be identified as the discussions are private.
Lee has pushed deeper into memory chips and displays to make Samsung less reliant on consumer electronics as he sold off assets and narrowed the scope of the conglomerate.
A deal would position the 48-year-old, a director of Fiat Chrysler’s controlling shareholder Exor SpA since 2012, to further put his stamp on the South Korean giant and benefit from rising interest in cars from technology companies.
Apple Inc, Baidu Inc (百度) and Google are pushing into cars, seeking to deploy their technology into new areas as cars become more advanced.
Samsung had more than US$65 billion of cash and equivalents as of June 30, according to the company.
A deal for Magneti Marelli could be worth more than US$3 billion with a goal of closing this year, said one of the people familiar with the matter. That would make it Samsung’s biggest-ever acquisition outside South Korea.
Samsung declined to comment in an e-mail statement. A Fiat Chrysler spokesman had no comment.
The first major automaker to strike a deal with Google on self-driving vehicles, Fiat Chrysler is in discussions with other technology companies, chief executive officer Sergio Marchionne said on a conference call after the company’s second-quarter earnings results last month.
After calling off efforts to pursue a merger with General Motors Co, Marchionne has made eliminating debt his highest priority before he leaves the post in 2019.
He contends that the auto industry wastes too much money and needs to consolidate to finance investment in new technology.
In December last year, Samsung created a team to work on automobile components, in-car entertainment and autonomous driving. It has also been charged with coordinating with other arms of the chaebol making batteries and providing software services.
Last month, Samsung’s Shanghai unit bought a 3 billion yuan (US$451 million) stake in China’s BYD Co (比亞迪) to gain a slice of surging sales of electric cars.
In 2009, Magneti Marelli and Samsung teamed up to develop display products for entertainment, information and navigation.
Samsung, which is expanding global sales of its displays using organic light-emitting diodes (OLED) and lighting solutions, could offer new light sources and bendable dashboards to design-sensitive luxury car drivers.
Magneti has years of experience in satellite navigation, connectivity, infotainment and telematics systems, which offer connectivity with external electronic devices. Telematic devices allow in-vehicle access to specific services, including insurance, car parks and anti-theft security.
Acquiring the business would give scale to Samsung’s automotive ambitions through established brands, plants and distribution. A deal could open up access for Samsung to supply some of Fiat’s luxury brands, which include Maserati.
Such a deal would also be the biggest move into automobiles by the South Korean conglomerate since Samsung Motors Inc went bankrupt ahead of an eventual sale to Renault SA in 2000.
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