Shares in Fincantieri fall on capital increase worries

By Elisa Anzolin

MILAN (Reuters) – Shares in Fincantieri fell 4.6% on Wednesday, hit by the prospect of a possible capital increase, which a source said would be necessary if the Italian shipbuilder went ahead with an acquisition it is considering in the defence sector.

Fincantieri and Franco-German KMW+Nexter Defence Systems (KNDS) are both interested in buying Leonardo’s OTO Melara and Wass units, several sources have told Reuters.

The two subsidiaries of the Italian defence group – in which the Treasury owns a 30% stake – make naval cannons, tank turrets and torpedoes.

Italian daily Il Messaggero on Wednesday reported Fincantieri had presented a 450 million euro non-binding offer for the units, adding it was considering a 1 billion euro rights issue to finance the deal, a figure roughly equal to its market value.

Fincantieri declined to comment on the report.

While confirming that a capital increase would be necessary if Fincantieri bid for Leonardo’s assets, the source close to the matter gave no indication about its size.

KNDS is ready to pay more than 650 million euros for the Leonardo’s assets, a third source close to the matter told Reuters.

Ministers’ meeting

Italy’s defence, treasury and industry ministers are expected to meet later on Wednesday to discuss the sale of OTO Melara and Wass, a source close to the matter separately said.

Rome wants to have a say in the deal since the transaction could have implications for Italian government-funded programmes for the army, the source said.

A consortium comprising Leonardo’s OTO Melara and Iveco Defence Vehicles is currently the supplier of the Italian army’s tank ‘Dardo’.

Rome plans to replace the Dardo with a new vehicle, launching a contract that would be attractive for its current supplier but also Germany’s Rheinmetall and KNDS.

As part of its bid for Leonardo’s units, KNDS has offered to include Italy in the Main Ground Combat System (MGCS) tank project, more popularly known as the “tank of the future”, two industry sources had told Reuters.

Fincantieri Chief Executive Giuseppe Bono in September told reporters the group did not need a capital increase barring extraordinary operations which, at the time, were not in sight.

($1 = 0.8915 euros)

(Reporting by Elisa Anzolin; additional reporting by Francesca Landini, editing by Valentina Za and David Evans)