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ROME — Italy’s Finmeccanica will sell its 14 percent stake in Italian propulsion firm Avio to an Italian state-controlled fund, the firm said May 31.
The sale will boost debt-laden Finmeccanica’s plan to sell off assets worth 1 billion euros ($1.24 billion) in 2012.
Under the deal, Finmeccanica will sell its stake in Avio to the Italian Strategic Fund, which is controlled by state fund the Cassa Depositi e Prestiti. The deal hinges on Avio being listed on the Milan stock exchange by the end 2012, Finmeccanica said.
The Italian Strategic Fund will also take part in the initial public offering for Avio and will build its stake in the firm to 15 percent, Finmeccanica said.
Avio is controlled by U.K. fund Cinven, which took over the firm in 2006 in a deal that valued the firm at 2.6 billion euros.
By switching a stake in Avio from state-controlled Finmeccanica to the Italian Strategic Fund, the Italian government retains a degree of control over Avio — which could help head off a possible French move to take over the firm — while handing Finmeccanica the cash to work on its debt problem.
Avio, which was formerly owned by Italy’s Fiat, reported 11.5 million euros in profit last year with turnover up 15.6 percent to 2 billion euros.
