Samsung Electronics is in advanced talks to buy some or all of the operations of automotive parts maker Magneti Marelli from Fiat Chrysler Automobiles, according to people familiar with the matter.
Samsung is particularly interested in Magneti Marelli’s 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 were private.
The deal could be worth more than $3bn with a goal of closing in 2016, one of the people said, which would make it the company’s biggest acquisition outside South Korea.
Fiat’s shares rose the most since October 2014.
Vice-chairman Lee Jae Yong is reshaping South Korea’s biggest company as he takes on more responsibilities once held by his father.
He has sold off assets and narrowed the conglomerate’s scope as he seeks to bounce back from a downturn in the smartphone business.
A move into automobile components would help decrease Samsung’s reliance on consumer electronics.
Lee, who has been a director of Fiat Chrysler’s controlling shareholder Exor since 2012, would also position his company to benefit from the rising interest in cars from technology companies.
Apple, Baidu and Google are pushing into automobiles, seeking to deploy their technology into new areas as cars become more advanced.
Samsung Electronics had more than $70bn of cash and marketable securities as of March 31, according to Bloomberg data.
In addition to global leadership in smartphones, Samsung is the world’s biggest producer of memory chips and televisions. Samsung declined to comment. A Fiat Chrysler spokesman had no comment.
Fiat Chrysler rose as much as 8.8%, trading up 7.9% to €5.88 at 12.07pm in Milan.
The first major car maker to strike a deal with Google on driverless vehicles, the company was in discussions with other technology companies, CEO Sergio Marchionne said after the company’s second-quarter earnings results last month.
After calling off efforts to pursue a merger with General Motors, Marchionne has made eliminating debt his highest priority before he leaves the post in 2019.
Achieving the goal would put Fiat Chrysler in a better position to find a partner.
Marchionne contends that the vehicle industry wastes too much money and needs to consolidate to finance investment in new technology.
Last month, Samsung’s Shanghai unit bought a 3-billion yuan ($451m) stake in China’s BYD to gain a slice of electric car sales.
In 2009, Magneti Marelli and Samsung teamed up to develop display products for entertainment, information and navigation.
Bloomberg