Black day today for Fincantieri on the Milan Stock Exchange, with shares losing over 8 percentage points. The rumors about an agreement reached between the Italian shipbuilding company and Leonardo have lit the sales fuse, according to which Fincantieri will acquire the Whitehead Alenia Sistemi Subacquei (WASS) submarine activities from the defense leader for 250-300 million euros ( but some journalistic sources speak of a figure of around 400 million euros).
We are only waiting for the official status of the operation, after the extraordinary convocation of the Fincantieri board of directors. The transaction would be financed through a capital increase of 500 million euros, equivalent to approximately 44% of the company’s current market capitalization. Of this amount, Cassa Depositi e Prestiti, Fincantieri’s majority shareholder with 71.32% of the shares, would be ready to subscribe the entire portion up to 400 million euros. The sum remaining after concluding the deal with Leonardo would be used by Fincantieri to develop its activities in the defense sector, a sector on which the company is focusing heavily. Defense today represents about a quarter of the public company’s overall turnover and strengthening the position in the submarine sector is an important step to proceed in the direction indicated by management.
Fincantieri: why the market sells shares
The Fincantieri-Leonardo operation was not liked by the market, although it would strengthen the shipbuilding company on the defense side, a rapidly growing sector. According to analysts at Banca Akros, “the bill is higher than expected and the size of the hypothesized capital increase exceeds the cash-out for WASS by 100 million euros”. In short, shareholders do not like a recapitalization at this time to support the company’s business, especially if the expense ultimately turns out to be excessive.
Also according to Equita SIM analysts, “the value of the deal would be higher than recent press rumors which hypothesized a value between 250 and 300 million euros”. However, the experts add that they do not know whether the perimeter of the transferred activities has changed during the negotiations given that WASS has no longer been an independent company since 2016. “The operation remains to be understood by evaluating the actual perimeter of WASS’s activities, the numbers , the official valuation, the method chosen by Fincantieri to finance the deal and the real size of the capital increase,” they stated.
