Andy Nativi/GENOA

State-controlled Italian industrial giant Finmeccanica, parent of aerospace and defence businesses Alenia, Agusta and FIAR, plans to raise L2,000-3,000 billion ($1.1-£1.7 billion) of new capital in a move that could reduce the stake held by state shareholder IRI to below 50%.

In addition to furthering the privatisation effort, Finmeccanica chief executive Alberto Lina says the move will provide fresh resources to boost the group's diversified activities, including some in the aerospace field. It could, for example, help fund a move for Spanish manufacturer CASA, in which the Italian conglomerate has declared an interest.

IRI controls 63% of Finmeccanica, with some of the remainder held by institutional investors and the rest floated on the stock exchange. Lina's plan - which requires government approval - would probably see a second share offering, although funds might also be raised either through a bond issue or loans.

Lina has indicated that some of the capital, which he would like to see raised before the end of this year, would be invested in Finmeccanica's space (Alenia Spazio), helicopter (Agusta) and missile (Alenia Marconi Systems - AMS) wings. The group - which also has energy and non-aviation transport divisions - has not yet revealed its results for last year, but is expected to make a loss of around L410 million.

Finmeccanica is still discussing the future of AMS with British Aerospace, which is poised to take over Marconi Electronics, the Italian company's joint venture in the missiles business.

BAe - which also has the Matra-BAe Dynamics venture with Aerospatiale - would prefer to completely realign its defence interests to avoid overlapping and duplication. However, sources say that Finmeccanica wants all BAe activities in competition with AMS, from radar to missiles, naval weapons and combat systems, to be placed under the umbrella of the latter.

The Italian company also aims to retain 50% control of the venture, and is prepared to make a major compensation payment to allow for this. Finmeccanica has a strong negotiating position in that the terms of the original AMS agreement may allow it to buy out the share held by Marconi following its take-over, after which it could seek out a partner other than BAe. France's Thomson CSF, which itself once planned to buy Marconi, is already understood to have made overtures.

BAe could, in theory, agree to Finmeccanica's demands and keep AMS as a separate entity, although this would mean missing out on the advantages of complete defence integration.

Source: Flight International