Italian group will have to sell assets to continue acquisition strategy to become major aerospace and defence player
Finmeccanica has unveiled the shape of its planned satellite joint venture with Alcatel, which will combine Italian assets worth €767 million ($928 million) in annual revenues with Alcatel's €1.3 billion space business. Although 2003 results, out last week, showed Finmeccanica's revenues up 6%at €8.28 billion, the space division has continued to suffer from a poor commercial market.
Finmeccanica will give up control of the Alenia Spazio satellite manufacturing business, which will be merged with Alcatel Space, Europe's largest satellite builder, in a joint venture majority-owned by Alcatel. Satellite services business Telespazio will be combined with Alcatel's satellite services division and remain under Finmeccanica's majority control. Due diligence inspections are now under way.
Finmeccanica took over Telespazio in 2002, one of a series of acquisitions aimed at building the company into an important player in aerospace and defence. To continue this strategy, the company says it may have to sell more assets to raise cash. As well as the expense of acquiring most of the rest of the Italian aerospace industry, Finmeccanica has also invested €1.2 billion in research and development.
The company funded previous takeovers by selling part of its stake in chip manufacturer STM, and a recent agreement with STM's other shareholders gives Finmeccanica the option to sell another 8.5% of its 18% holding, which would yield €1.4 billion at current prices. The agreement also allows Finmeccanica to borrow against its stake -an earlier debt issue backed by STM shares raised €500 million for the company. Finmeccanica adds: "We are open to any suggestion to reduce our stakes in the transport and energy markets; these are not our core business."
BAE Systems/Finmeccanica avionics joint venture Alenia Marconi Systems (AMS) has opened an office in Washington DC, under newly appointed vice-president Dennis Kennelly. The office will oversee AMS operations in the USA, including its Air Traffic Management & Airport Systems undertaking in Kansas. AMS will soon come under majority BAE control as part of the Eurosystems series of joint ventures, but air traffic management will be moved to Finmeccanica.
ALEXANDER CAMPBELL / LONDON
Source: Flight International
