Italy knocks back Safran’s $1.8 billion Collins Aerospace deal

By Sudip Kar-Gupta and Giuseppe Fonte

PARIS (Reuters) -Italy has knocked back French group Safran’s planned $1.8 billion purchase of the flight control systems arm of Collins Aerospace, with an Italian government source citing concern over jobs and contracts for the Eurofighter programme.

Safran said on Monday that Rome had vetoed its acquisition of Microtecnica, Collins Aerospace’s Italian subsidiary, using its “golden power” to halt the takeover of what it deems a strategic asset.

The move by Giorgia Meloni’s government is a rare occurrence against a European Union company. Safran’s biggest shareholder is the French government, with an 11.2% stake.

“Safran remains committed to the transaction and is working with all parties to determine the appropriate next steps. Further information will be provided as appropriate,” Safran said in a statement.

A Safran spokesperson declined to comment further on the matter.

The proposed deal to buy the flight controls business of Collins Aerospace, which is owned by Raytheon, had been announced by Safran in July.

However, Safran did not provide sufficient guarantees that it would preserve production lines in Italy, an Italian government source said, asking not to be named owing to the sensitivity of the matter.

The source added that Italy had also held talks with the German government about the Safran deal and that Germany had highlighted the risk that the deal could affect supplies for the Eurofighter and Tornado jet fighter programmes.

“The case looks interesting as (Italian) vetoes against buyers from EU and NATO countries are rare,” said Francesco Galietti, founder of political risk firm Policy Sonar.

Meloni is due to travel to Berlin this week to seal a German-Italian cooperation deal, including on defence and technology. Economy Minister Giancarlo Giorgetti is due to hold talks with his French counterpart Bruno Le Maire on Tuesday.

The decision by the Italian government does not mean a deal cannot be salvaged. Safran can appeal or offer concessions to appease the Rome’s concerns.

Since the introduction of the so-called golden powers in 2012, Italian government authorities have mainly vetoed acquisitions of domestic firms by Chinese and Russian companies.

(Reporting by Sudip Kar-Gupta and Giuseppe FonteEditing by Silvia Aloisi and David Goodman)