Marelli and Highly announce the creation of new joint venture “Highly Marelli”

Through synergies and targeted investment in electrification for HVAC and EDC systems, the new JV will create a new leading player that is well placed to access the growing Chinese market

September 7^th, 2020

Leading automotive supplier Marelli Corporation K.K. (“Marelli”) and Highly International (Hong Kong) Limited. (“Highly”) have today announced the signing of their agreement to establish a new joint venture, Highly Marelli Holdings Co., Ltd. (hereinafter “Highly Marelli” or “JV”). This joint venture creates a leading cabin comfort business, focused on developing world-class solutions for customers and suppliers specifically in electrification of compressors and heating, ventilation & air conditioning (“HVAC”) and electric driven compressor (“EDC”) systems. The sales revenue of the business unit in 2019 was c. JPY90 billion (US$857 million).

The creation of the JV follows Marelli’s 2019 acquisition of equity interest in Shanghai Highly New Energy Technology Co., Ltd. (“HNET”) from Johnson Controls-Hitachi Air Conditioning (“JCH”). HNET is a growing manufacturer of EDC for passenger and commercial vehicles and was an established joint venture between Highly and JCH. At the time of the announcement of its acquisition of JCH’s interest in HNET, Marelli outlined its intention to develop further joint venture partnerships with Highly, including for HVAC.

Both parties will now work towards a legal closing date at the beginning of January 2021, during which Marelli’s relevant compressors and HVAC business will transfer to the Joint Venture to enable it to be operated and run under one business owned by the JV. Under this new structure, employees currently based within Marelli’s compressors and HVAC business will transfer to entities under the JV on existing terms and conditions. The JV will be registered in Hong Kong, China and with operational headquarters in both Shanghai, China and in Saitama, Japan, alongside Marelli’s global HQ.

Beda Bolzenius, CEO, Marelli, said: “This is a strategically significant and exciting partnership for Marelli. Through it, we have direct and immediate access to the growing Chinese market. It facilitates even greater investment in electrification technologies and achieves greater synergies, delivering even better value to our customers and career opportunities for our people. Highly’s strong reputation and brand presence in China, combined with our reputation for manufacturing excellence creates a business with enormous potential. This is another great step forward for us towards building a leading global tier 1 supplier.”

Mr. Zheng Jianhua, Chairman of Shanghai Electric, the controlling shareholder of Highly Group, said: “At present, the global automotive industry is facing a major transformation, and the development of new energy vehicles is just unfolding. The joint venture company between Highly and Marelli is dedicated to becoming the world's leading system supplier by leading the technological transformation of thermal management for new energy vehicles. And with Highly’s leading edge in new energy vehicle compressor technology and strong distribution network, and Marelli’s leading position in the global market for auto parts, Highly Marelli will create greater value for customers.'