Concerns over supplies to armed forces and Eurofighter program cited as reasons for veto
In a rare move, Italy has rejected French group Safran’s planned $1.8 billion purchase of the flight control systems arm of Collins Aerospace. Italian government sources have cited concerns over supplies to armed forces and contracts for the Eurofighter program as the reasons behind the veto. Safran, whose biggest shareholder is the French government, remains committed to the transaction and is working to determine the next steps. Italy’s decision complicates the acquisition and highlights the sensitivity and complexity of cross-border deals in the defense industry.
Italy’s Concerns and Safran’s Response
Insufficient guarantees for production lines in Italy and disruption of supplies to armed forces cited
Italy’s decision to block Safran’s acquisition of Collins Aerospace’s Italian subsidiary, Microtecnica, stems from concerns about the preservation of production lines in Italy. The Italian government source, speaking on the condition of anonymity, stated that Safran did not provide adequate guarantees in this regard. Additionally, Italy held talks with the German government, which expressed concerns about the deal’s potential impact on supplies for the Eurofighter and Tornado jet fighter programs. Safran, however, expressed surprise at Italy’s decision, stating that they had not held discussions with the Italian or German governments and highlighted their existing role as suppliers for the Eurofighter and other Italian defense programs.
Italy’s Rare Veto and European Partner Relations
Italy’s veto against EU and NATO countries is a rare occurrence
Italy’s decision to veto the acquisition is an unusual move against a European Union company. The use of “golden power” to halt the takeover of a strategic asset is a seldom-used measure. The lack of consultations between Italy and France, two European partner countries, has been deemed “regrettable” by a French finance ministry source. The case has attracted attention due to the rarity of Italian vetoes against buyers from EU and NATO countries.
Implications for the Defense Industry
Complexities and sensitivities of cross-border defense deals come to the forefront
The blocked acquisition highlights the complexities and sensitivities involved in cross-border defense deals. The defense industry operates within a framework of national security concerns and strategic interests, often leading to government intervention in mergers and acquisitions. The concerns raised by Italy regarding supplies to armed forces and the Eurofighter program reflect the need to safeguard national defense capabilities. The case also underscores the importance of open communication and collaboration between European partner countries to ensure smooth transactions and avoid misunderstandings.
Next Steps and Future Cooperation
Safran to determine appropriate next steps; Italian and German officials to hold talks
Safran, despite the setback, remains committed to the transaction and will work with all parties involved to determine the appropriate next steps. The Italian government’s decision comes at a crucial time as Italian politicians, including Giorgia Meloni, plan to travel to Berlin to seal a German-Italian cooperation deal, including defense and technology. Economy Minister Giancarlo Giorgetti is also scheduled to hold talks with his French counterpart Bruno Le Maire. These discussions and negotiations will be crucial in resolving the current impasse and paving the way for future cooperation between the countries involved.
Conclusion: The Italian government’s veto of Safran’s acquisition of Collins Aerospace’s flight control systems arm reflects the complexities and sensitivities of cross-border defense deals. Concerns over supplies to armed forces and the Eurofighter program have been cited as reasons for the decision. The case highlights the need for open communication and collaboration between European partner countries to ensure smooth transactions and avoid misunderstandings. Safran remains committed to the transaction and will work towards determining the appropriate next steps. The outcome of the ongoing discussions and negotiations will shape the future of this acquisition and the cooperation between Italy, France, and Germany in the defense industry.
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