Why Leonardo is aiming for Iveco Defense
Iveco goes up on the stock market following Leonardo's interest in the Iveco Defense Vehicles (IDV) division, the subsidiary dedicated to military vehicles of the group controlled by Exor. Facts, numbers and insights
Iveco Sprint on the stock exchange on the hypothesis of Leonardo's interest in the military vehicles division.
On Piazza Affari the stock gained 5.86% to 12.66 euros at 3pm after the rumors from Il Sole 24 Ore about an interest from the defense and aerospace giant led by Roberto Cingolani for Iveco Defense Vehicles (Idv).
The latter is the company dedicated to military vehicles of the Iveco group controlled by Exor (John Elkann's holding company which also owns Stellantis , CNH Industrial and the Gedi publishing group). According to the Confindustria newspaper there would have been initial contacts with Exor.
According to Il Sole , the acquisition is part of the former Finmeccanica group's strategy to expand its presence in the land armaments industry.
On the other hand, Leonardo already counts on a collaboration with Iveco through its subsidiary Oto Melara, within the current IOC, industry leader in land armaments for the development and production of armored vehicles such as the Centauro (I and II) and vehicle support.
Furthermore, the indiscretions of the Confindustria newspaper also follow the rumors of last December relaunched by the press across the Alps. In fact, the Tribune had revealed that the Italian government is calling for a merger between Iveco Defense Vehicles and Oto Melara to enter the Franco-German Mgcs (Main Ground Combat System) programme, the combat tank of the future. According to the French newspaper, the Italian Defense Minister Guido Crosetto "is pushing hard to join the MGCS and "regularly speaks about it to the French Minister of the Armed Forces Sébastien Lecornu".
Known as the Main Ground Combat System, the MGCS is a project of KNDS, a Franco-German consortium formed by the defense groups Krauss-Maffei Wegmann (Kmw, Germany) and Nexter Defense Systems (France) in cooperation with Rheinmetall.
All the details.
LAND DEFENSE PROGRAMS
On 16 October, Defense published and transmitted to Parliament the multi-annual planning document (DPP) for Defense for the three-year period 2023-2025. The latter makes official the spending forecast of 8.2 billion for the purchase of the German Leopard 2 tanks produced by the German Kmw (leader) and Rheimmetall (turret supplier) and of 15 billion for the acquisition of a system of systems for heavy infantry (A2CS), focused on both combat (Armored Infantry Fighting Vehicle – AIFV) and support platforms.
This latest program could prove to be a catalyst for industrial integration in the sector, as soon as Rome will be able to decide on potential partners for the Italian Leonardo and Iveco between the Franco-German consortium Knds and the German Rheinmetall.
THE POSITION OF THE FRANCO-GERMAN CONSORTIUM
Last January to Defense News, a KNDS spokesperson said that "the Italian vehicle could be a blueprint for possible cooperation between Italian industry and KNDS." According to Defense News , the Franco-German consortium may consider offering Italy the tracked version of its Boxer vehicle, which it tested and demonstrated at the 2022 Eurosatory defense show in France; the platform is not in production.
THE RHEINMETALL PROPOSAL
On the other side there is Rheinmetall, which has already been committed to identifying the operational requirements for the replacement of the Army Dart since January 2021.
“We offer to build in Italy and together with the national champions of the Defense Industry the largest European land hub which will allow Italy to be a protagonist not only in the avionics and naval dimension but also in the land technological component” reiterated the CEO of Rheinmetall Italia, Alessandro Ercolani, in a recent parliamentary hearing .
In particular, the German group proposed its Lynx tracked vehicle and said it was ready to cede design authority.
THE STRATEGIC ALLIANCE BETWEEN LEONARDO AND KNDS
Meanwhile, last December 13th the Italian defense giant and Knds, the group born from the aggregation of Kmw and Nexter, two of the main European producers of military land systems based in Germany and France, in agreement with the Italian Ministry of Defense , “have signed a strategic alliance to define and further develop a closer collaboration”. “The objective of the agreement – we read in the note from the Piazza Monte Grappa company – is the creation of a European Defense group and the strengthening of collaboration in the field of terrestrial electronics”.
Not only that, "the strategic alliance will allow the implementation of collaboration programs between European nations through the strengthening of their industrial bases and the development of the future generation of platforms for armored vehicles, including the Mgcs (Main Ground Combat System)" .
As Il Sole 24 Ore recalls, “Leonardo is aiming for an agreement with Knds to make an “Italianized” Leopard 2, with at least 50% of the value made in Italy, from the former Oto Melara (the turret). We also need to convince Rheinmetall, which today supplies the Leopard's turret."
THE AIMS OF THE EX FINMECCANICA GROUP
In all this, what is the position of the Italian defense giant?
“Italy has important expertise in Oto Melara but also in the Iveco component with which we are partners in the consortium,” explained the general director of Leonardo, Lorenzo Mariani, in a hearing at the Defense Commission of the Chamber at the end of 2023.
In 1985 Oto Melara became part of a joint consortium with Iveco, forming the current Iveco-Oto Melara Cio for the development and production of armored vehicles such as the Centauro (I and II) and vehicle support. “Within this consortium, Iveco Defense Vehicles takes care of the engines, the mobility part, all the automotive components, the final integration of the wheeled armored vehicles while Leonardo is responsible for the weapon systems, targeting and control of fire, as well as the final integration of tracked armored vehicles” La Tribune recently recalled.
In 2021, the group then headed at the time by Alessandro Profumo had put its land armaments subsidiary Oto Melara up for sale (both Knds and Rheinmetall had made offers) together with Wass, a sale that remained on stand-by. If for Wass there is now talk of a possible acquisition by Fincantieri, "The sale of a shareholding in Oto Melara is no longer under discussion" notes Il Sole 24 Ore .
Now the former Finmeccanica led by Roberto Cingolani is aiming to involve Oto Melara in terrestrial programmes.
“It will probably be appropriate to have a collaboration at a European level because I don't think there is space for multiple platforms: we are looking for a decent collaboration both in terms of participation and technology and the financial support that comes from the DPP is an excellent encouragement”, Mariani had specified at the hearing.
LEONARDO'S INTEREST IN IVECO DEFENSE VEHICLES
According to what appears to Il Sole 24 Ore , “Leonardo is considering the idea of expanding with an acquisition. The objective of Cingolani and Mariani would be to buy Iveco Defense Vehicles (IDV), the company of the Iveco group (controlled by Exor) which makes defense and civil protection vehicles, armored vehicles, trucks and tractors".
“IDV has its main headquarters in Bolzano, secondary offices in Piacenza, Vittorio Veneto and Brazil. There have been some exploratory talks in the last six months. Cingolani knows John Elkann, before becoming Minister of the Environment he had been appointed to the Ferrari board of directors. There are no confirmations or official comments on the proposed acquisition, which would have a value of around 750 million euros" concludes the Confindustria newspaper.
THE POSITION OF THE ITALIAN GOVERNMENT
And the position of the Italian government also remains to be understood on the possible match played by Leonardo. According to sources from the French newspaper La Tribune «Italy wishes to establish a company resulting from the activities of Leonardo and Iveco Defense Vehicle on the Knds model».
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/smartcity/perche-leonardo-punta-a-iveco-defence/ on Fri, 08 Mar 2024 13:26:41 +0000.