Leonardo will buy a 25.1% stake in Hensoldt from a KKR-controlled investment vehicle for 606 million euros (US$733 million), the company announced on Saturday.
The decision is expected to beef up the Italian aerospace company’s defense electronics business and help it have a broader role in the European defense industry.
Leonardo is buying the stake from Square Lux Holding II, the KKR-controlled entity, for about 23 euros a share, the company said in a statement. The deal makes state-backed Leonardo the largest shareholder of the German defense company along with government-backed Kreditanstalt Fuer Wiederaufbau, which agreed in March to acquire a 25.1% stake. Square Lux will still hold 18% after the sale.
Hensoldt is a leading European player in the field of sensor solutions for defence and security applications, with an expanding portfolio in cyber security, data management and robotics. As a result of the stake purchase, Leonardo will become the largest shareholder of Hensoldt alongside Kreditanstalt für Wiederaufbau (KfW) which is 80% owned by the Federal Republic of Germany. KfW agreed to acquire a 25.1% stake in the company in March this year.
“We are excited about the investment in Hensoldt as the catalyst for the establishment of closer cooperation that will further enhance our respective positions in the growing defence electronics market,” said Alessandro Profumo, Leonardo CEO. “We believe that this step will create value for all our shareholders as it will bring together complementary strengths to serve more customers and partners with the solutions they need, whilst preserving national technologies and capabilities.”
“With this transaction, we will have a second long-term anchor shareholder in our company and a strong potential strategic partner with whom we are already successfully working together on a number of programs,” said Thomas Müller, Hensoldt CEO. “As a leading provider of sensor solutions for defence and security applications, we see multiple opportunities of working together with Leonardo to further support our successful strategy and to be able to strengthen Hensoldt’s long-term growth.”
The two companies are already collaborating on the Eurofighter Typhoon program as independent operators within the consortium model. The deal is expected to strengthen Italian and German defense ties and allow Leonardo to play a more active role in European defense cooperation.
Italian Defense Minister Lorenzo Guerini said in a tweet after announcement that the “excellent operation conducted by the Italian company moves in the direction of European cooperation” in the defense sector.
Hensoldt had, less than a week ago, said that KKR was soliciting bids for a 25.1% stake among major European defence contractors and that it was in advanced talks with companies including Leonardo, France’s Thales, Spain’s Indra and Sweden’s Saab.
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