Fincantieri will acquire Leonardo’s Underwater Armament Systems (UAS) torpedo and sonar business line in a deal that could reach €415m ($447m) by its conclusion, expected to be finalised at the beginning of 2025.
Fincantieri will acquire Leonardo’s torpedo production technologies as well as its underwater acoustic technologies, with Fincantieri intending to use the new property to grow its underwater sector, focusing on new military applications, as well as solutions for underwater civil infrastructure.
In 2023, the UAS line of business generated revenues for Leonardo of approximately €160m ($172m) and an EBITDA of € 34m ($37m). UAS also includes a 50% participation in GEIE EuroTorp established with Naval Group and Thales, which makes the MU90 light torpedo.
As part of its strategic rationale for the transaction, Fincantieri estimates the target underwater market to have a €100bn cumulative value between 2024-28, with a 15% compounded annual growth rate.
In a statement on the acquisition, Fincantieri has said that the underwater domain holds strategic importance in the Mediterranean Sea, as an area of dense critical infrastructure. Fincatieri also recognised the strength of growth in the intelligence, surveillance and reconnaissance sector as necessitating a 'dedicated industrial focus’.
Chief executive officer of Fincantieri Pierroberto Folgiero expressed satisfaction with the deal, adding that the acquisition is a milestone in the company’s equity plans and underwater strategy for the next industrial cycle. “Underwater technological autonomy and global executive capabilities, in this new geopolitical and industrial scenario, will be the distinguishing factors that will allow Fincantieri to fully exploit Fincantieri's potential in the interest of the Group's industrial and financial stakeholders."
The value of the acquisition is €300m as fixed enterprise value, with a variable component that has a maximum value of €115m based on growth assumptions for 2024. Amongst other measures, Fincantieri has suggested a reverse stock split as part of its plans to finance the acquisition.
Leonardo CEO and MG Roberto Cingolani stated: “The disposal of the Underwater Armaments Systems is part of the plan of rationalising Leonardo’s business portfolio. The initiative gives further emphasis to the cooperation between Leonardo and Fincantieri, within the framework aimed at achieving more effective defence and global competitiveness.”
UAS was originally a subsidiary known as Whitehead Alenia Sistemi Subacquei S.p.A., specialising in the construction of submarine defence systems, such as torpedos, countermeasures, and sonar systems, until Whitehead merged with Leonardo S.p.A in 2016 and came to be known as the UAS business line.
