Fiat-Chrysler Automobiles officially has a buyer for its Magneti Marelli supplier division in Japan's Calsonic Kansei, itself owned by U.S.-based private equity firm KKR. FCA will unload the parts division for a reported $7.1 billion, according to a Sunday Reuters report.

With KKR acquiring the business, Magneti Marelli and Calsonic Kansei will become Magneti Marelli CK Holdings and emerge as the seventh-largest independent auto supplier in the world with annual revenues of $17.5 billion. Magneti Marelli specializes in lighting, powertrains, and high-tech electronics. A spin-off or sale of Magneti Marelli has been in the works since last year after late CEO Sergio Marchionne outlined the parts division's future.

Marchionne planned to divest from the parts division, but FCA remained open to offers. Calsonic initially made a bid of $6.7 billion, according to the report. FCA preferred to sell to a firm like Calsonic over a pure private equity firm as it would reduce the likelihood of breaking up the business. However, the new company is likely to cut costs through synergies, according to Reuters. Magneti Marelli employes 43,000 people in 19 countries.

Neither FCA nor Fiat’s founding Agnelli family will have a stake in Magneti Marelli CK Holdings, but FCA plans for a multi-year agreement to secure various supplies for its automaking business and to maintain operations in Italy. 

The deal is the first major event under FCA's new CEO, Mike Manley. The executive was chosen for the top role as Marchionne's health quickly worsened ahead of his untimely death in July. Manley has said he plans to execute the late CEO's latest five-year plan, which called for a Magneti Marelli spin-off or sale, and greater investment into hybrids and electrification.

With the sale of the parts division, FCA will also have funds on hand for the major investments required in electrification to meet stricter global emissions regulations. The funds could also be used for a promised dividend payout and a share buyback, the Reuters report said.

Next up for sale are likely both Teksid and Comau, FCA's remaining components businesses.

The deal is expected to close in the first half of 2019, pending regulatory approval.

Disclosure: KKR is the parent company of Internet Brands, which owns Motor Authority, though nobody around here had any idea.