Leonardo and tonic in Piazza Affari, the stock gains 2.2% this morning to 6.53 euros for 3.77 billion capitalization. Yesterday afternoon, the Italian defense group announced the completion of the acquisition from Kkr of 25.1% of Hensoldt (Hag), a German leader in the field of sensors for security applications, for a cash value of 606 million euros.
According to the Italian group, led by CEO Alessandro Profumo, the transaction represents a step forward in achieving the strategic goal of acquiring a leadership position in the European defense electronics market, as defined by the Be Tomorrow-Leonardo 2030 Plan and reflects Leonardo’s determination to play an active role in the consolidation process underway, also in the light of future cooperation programs in continental Europe. The investment will make it possible to establish a long-term strategic presence in the rapidly growing German market and to strengthen the partnership between the two companies. With this operation Leonardo, thanks to its industrial presence in Italy, UK, USA and Poland,
Banca Akros (buy, target price € 9.25) recalls that Leonardo spent € 23 per share for Hag, as announced in April 2021, when the German stock was trading at € 15.6, today at € 12.7 ( almost half the load price). The Italian group took part in a competitive selection against the French Thales, the Spanish Indra, the Swedish Saab and the Norwegian Kongsberg.
Analysts explain that the proceeds of € 606 million for the acquisition will be recorded in the first quarter of 2022 and not in the 2021 budget, “leaving the group some time to find a way to finance the move”. Among other things, Leonardo is trying to sell the subsidiaries Oto Melara and Wass and to list the US Ddr, “each of these two options would trigger a collection of around or even more than 600 million euros, equivalent to the price of Hag, a move that it would limit or eliminate the impact on the net financial debt of the operation “, explains Akros.
Good news comes from Brazil. Yesterday the Italian and Brazilian defense ministers signed a letter of intent to strengthen the collaboration between the two countries in the defense field. The agreement should support the Italian groups present in the country, for example Iveco Defense Vehicles and Leonardo itself, Akros argues, which are competing to provide the Brazilian army with a new 8×8 as part of the Vbc-Cav program.
Last March, the Brazilian military launched the Vbc-Cav project to identify the supplier of a new 8×8 armored combat vehicle (ACV) equipped with a 105mm (or larger) gun. Brazil intends to purchase between 93 and 221 ACVs by 2026, which, according to Banca Akros analysts, could be worth between 0.93 and 2.2 billion euros.
Leonardo could compete with the Idv Centauro II model, which “represents an excellent option, perhaps the best, for the needs of Brazil”. The model, a brand new version of the Centauro, was ordered by the Italian army in 2018/19 in 96 units. The model offers both 105 and 120mm guns. The other relevant contenders in the Vbc-Cav race are the German Kmw and the Kongsberg / Patria Xp. The Brazilian military is expected to make a decision “very soon why the first two Vbc-Cav vehicles should be shown at the celebrations of the 200th anniversary of the country’s independence on September 7, 2022,” Akros concludes. (All rights reserved)
