ROME, June 3 (Reuters) – Germany’s Rheinmetall (RHMG.DE) has despatched Italy’s Leonardo (LDOF.MI) a proposal for a minority stake in its OTO Melara cannon maker unit valuing the entire enterprise at virtually 430 million euros ($462 million), in response to a doc and two sources near the matter.
Leonardo put OTO Melara up on the market final yr and the Russian invasion of Ukraine in February has since highlighted the necessity for extra superior floor fight techniques and larger European spending and cooperation on defence.
The non-binding provide was introduced on the finish of Might and Rheinmetall is looking for to purchase as much as 49% of the corporate, the sources instructed Reuters on Thursday, looking for anonymity due to the sensitivity of the matter.
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Rheinmetall has set a worth of 190 million to 210 million euros as an indicative worth for the 49% stake in OTO Melara, a doc seen by Reuters confirmed.
The doc mentioned Rheinmetall would in future be open to buying an extra 2% or extra in OTO Melara, which might give it majority possession, in keeping with the corporate’s industrial plan and its stakeholders’ technique.
Shares in Leonardo rose 3% on Friday following the report.
Rheinmetall’s transfer comes after Franco-German consortium KMW+Nexter Defence Programs (KNDS) and Italian shipbuilder Fincantieri (FCT.MI) final yr despatched Leonardo a preliminary provide to purchase the entire of OTO Melara and its sister firm Wass. learn extra
Leonardo, which plans the sale as a part of a broader technique to deal with helicopters, plane and electronics for defence, was not out there for remark. Rheinmetall didn’t reply to a Reuters electronic mail looking for remark.
GOVERNMENT ROLE
The Italian authorities has been knowledgeable, the sources mentioned, however Rheinmetall nonetheless must safe Italy’s backing, one of many sources mentioned.
Rome has the facility to dam or set strict situations on takeovers in strategic sectors, corresponding to defence, vitality and banking.
Earlier than giving its backing to any modifications in OTO Melara’s possession, Rome needs Italy to be included within the Franco-German Primary Floor Fight System (MGCS) tank mission, extra popularly often known as the “tank of the long run”, one of many sources mentioned.
Together with Italy might create the chance for Leonardo to supply sensors and defence electronics techniques for the brand new tanks.
Italian Prime Minister Mario Draghi has identified that the European Union spends about 3 times as a lot on defence as Russia, stressing the necessity for higher coordination.
Brokerage Equita warned a ultimate determination on a sale might nonetheless take time, given the federal government’s powers to intervene.
($1=0.9305 euros)
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Enhancing by Barbara Lewis and Clarence Fernandez
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