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Finmeccanica Might Retain Stake in Avio Space

Jun. 17, 2013 - 03:45AM   |  
By TOM KINGTON   |   Comments
Avio's Vega launcher.
Avio's Vega launcher. (Avio)
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PARIS — Italy’s Finmeccanica is considering hanging on to its stake in Avio’s space operations, in the face of interest from overseas buyers, CEO Alessandro Pansa said at the Paris Air Show on Monday.

“We are investing in space and that could involve Avio Space,” Pansa said at a press conference.

Last December, General Electric agreed to buy the aviation activity of Avio for US $4.3 billion from UK fund Cinven and Finmeccanica, which controlled 14 percent.

But Cinven and Finmeccanica held onto their stakes in Avio’s space activities, which includes the Vega launcher and which saw €285 million (US $380 million) in turnover in 2012. Overseas firms including Safran, EADS and US firm Aerojet have reportedly expressed interest in the space activity, but Finmeccanica has an option to buy out Cinven’s share by October.

Moving on to describe Finmeccanica’s overall strategy in his first air show appearance as CEO, Pansa gave a presentation stating that the firm is seeking to become a “centralized, top-down business,” a “more cohesive group” and “less of a federation.”

The move to impose greater authority over Finmeccanica’s wide range of units, which manufacture products from helicopters to armored vehicles to airborne radars, reflects a move to develop more centralized auditing, shorter reporting lines, greater transparency and less competition between units, a phenomenon Pansa described as “outrageous.”

It marks a sharp contrast from the policy undertaken by Pansa’s predecessor, Giuseppe Orsi, of encouraging more autonomy among units and making unit managers more accountable. Pansa’s approach may also have implications for Finmeccanica’s management strategy in the US, where Orsi appointed former Deputy Defense Secretary Bill Lynn in 2012 to represent all Finmeccanica’s stateside activities — including DRS as well as other units — in talks with the Pentagon, a move which would have shifted influence over US activities away from Rome.

Asked how the new centralized policy would affect Finmeccanica’s presence in the US, Pansa said integration between DRS and Fimeccanica is progressing, and that Finmeccanica managers are being appointed within the Proxy Agreement covering DRS “when it is allowed,” as part of a process of helping DRS become more global.

Orsi was arrested in February by Italian magistrates on suspicion of involvement in an alleged kickback paid in India to help win a helicopter tender. He has denied all wrongdoing. Media reports have since suggested Finmeccanica could be involved in a second probe in India into a subsequent, Indian Army helicopter competition. But Daniele Romiti, the CEO of Finmeccanica helicopter unit AgustaWestland, played down the report. “We were not part of that bid, so we don’t know anything about it,” he said on Monday. ■

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