Rheinmetall-Leonardo, what stage is the sale of Oto Melara at?

In 2021 Leonardo started the sale of the subsidiaries Oto Melara-Wass. Before last summer, Rheinmetall had come forward with a proposal to Leonardo to acquire a minority stake in Oto. In the meantime the executive has changed, but at what stage is the dossier?

The sale of Oto Melara and Wass, the two land and naval armaments subsidiaries put up for sale by Leonardo in 2021, remained on standby.

Initially the Franco-German consortium Knds and Fincantieri expressed interest in Oto Melara-Wass. Last May the German Rheinmetall also presented a non-binding offer to Leonardo worth between 190 and 210 million euros for the former Oto. The German defense group Rheinmetall wants to invest in Italy by purchasing up to 49% of Oto Melara, the land-based armaments subsidiary put up for sale by Leonardo together with the other Wass unit.

“Leonardo CEO Alessandro Profumo said on July 28 that the group is working to reach an agreement for the sale of its firearms subsidiary, Oto Melara, and its naval torpedo specialist, Wass, but it needed a new government to be able to finalize any potential deal,” Banca Akros analysts highlighted last September, quoted by MF .

In fact, the last word belongs to the government, which controls Leonardo (30% through the Ministry of Economy and Finance). And at the end of October the new executive led by Meloni took office. “At the moment the proposal is being examined by the new executive who will have to decide which direction to take” Rheinmetall Italia underlined last November .

News was therefore expected by the end of 2022, but in the meantime the expiry of the BoDs of the companies in which the Mef invests, such as Leonardo, which actually expires on 31 December 2022, has taken care of blocking the progress of the dossier.

“It will expire in April, we'll see” commented Leonardo's managing director, Alessandro Profumo, on the sidelines of a conference on the aerospace chain in Lombardy at the end of January, to those who asked him about future appointments to the group's board of directors.

All the details.

WHAT OTO MELARA DOES, PART OF LEONARDO'S DEFENSE SYSTEMS DIVISION

In summary, Oto Melara produces the most widespread cannon on warships around the world: the 76/62 purchased by the fleets of 53 countries, including the French and German ones. In addition, the company has developed the "Vulcano" technology that makes artillery shells very similar to missiles, with autonomous guidance in the final trajectory and an increased range.

In 1985 the company from La Spezia became part of a joint consortium with Iveco, forming the current Cio Iveco-Oto Melara, leader of the land armaments industry.

Since 2016, Oto Melara has been part of Leonardo's Defense Systems division. The group does not provide economic data on the subsidiaries. The most recent ones, explains Akros, "indicate that Oto Melara recorded revenues of 356 million euros in 2015 with an ebit of 38 million (ebit margin of 10.7%)". “In 2014 revenues were 390 million with an ebit of 46 million (ebit margin of 11.8%)” reports MF .

RHEINMETALL'S PROPOSAL FOR OTO MELARA

As already explained in parliamentary hearings by the CEO of Rheinmetall Italy Alessandro Ercolani, Rheinmetall proposes itself as a strategic partner of our country in the land sector. In this way, the Italian-German axis on defense would be strengthened, which started precisely with the acquisition of 25.1% of Hensoldt, a German defense electronics company, by Leonardo.

As emerges from the proposal sent to Leonardo – which Startmag has read – the growth strategy for Oto Melara would be identified in the future land programs for infantry.

Starting from the new light tank — Aifv — to replace the Dardo up to the participation in the program of the future European tank.

“The Mbt program is expected from 2035, and Italy could play an essential role: not only in 15 years but also in the study phase currently underway,” Papperger underlined to Il Sole 24 Ore last spring.

In these programs, the combination of Rheinmetall and Oto Melara would give life to a national military pole functional to the consolidation of the Italian land sector.

CREATING A TERRESTRIAL POLE OF THE ITALIAN DEFENSE

All of this is part of the vision that has as its objective the creation of a national center of excellence in the land sector, led and managed by Oto Melara itself, which will immediately have to focus on the program for the new Infantry Fighting Vehicle. and about the future European tank Mbt.

"Precisely in the Oto Melara plants we see the epicenter of terrestrial industrial activity acting as an "aggregator" for the other national players so as to achieve that "international and European" dimension necessary to face the imminent challenges" he explained in a hearing to the Chamber last December Alessandro Ercolani, CEO of Rheinmetall Italy.

In particular on the tracked vehicle programmes, Rheinmetall is the leading supplier, it will guarantee high-level integration with Oto Melara, with the possibility of creating a center of expertise in Italy.

If the Army were to choose the German Lynx proposed by Rheinmetall to replace the Dardo, it would still be an Italian Lynx, produced in the Oto Melara factories. Furthermore, our country could obtain the integration of the turret produced by Oto-Melara and Leonardo sensors on the vehicle.

Again in its non-binding offer, Rheinmetall mentions the possibility of deepening industrial relations also with Leonardo itself.

“The idea is to bring together the Italian land sector in a virtuous circle” observes Rheinmetall, to face both “internal and external competition with one's own qualities and excellence (such as the Oto Melara turrets or the 'electronics) entering a world that is a bit that of aeronautics in which, taking Leonardo as an example, fundamental components are produced for programs that guarantee work cycles of 30/40 years (such as the Eurofighter and Tornado programmes”.

THE GOVERNMENT WAITING FOR THE RENEWAL OF THE EX FINMECCANICA BOD

So now wait for the Meloni executive to decide the future of Oto Melara-Wass. In particular to the ministers who follow the dossier (Guido Crosetto at the Defence, Giancarlo Giorgetti at the Mef and Adolfo Urso at the Ministry of Enterprise and Made in Italy).

This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/economia/rheinmetall-leonardo-a-che-punto-e-la-vendita-di-oto-melara/ on Wed, 15 Feb 2023 06:33:34 +0000.