ROME – Italian shipyard Fincantieri is holding early talks with Italy’s Leonardo to acquire its naval gun manufacturing operation, formerly known as Oto Melara.

The deal, if concluded, would see Fincantieri take charge of the production of the Leonardo-built 76mm and 127mm naval cannons which it mounts on its warships and which have also been widely exported around the world.

“There are talks, but they are at a very initial stage,” a source familiar with the talks told Defense News after negotiations were first reported by Italian newspaper Il Secolo XIX, which said a deal could be struck by year’s end.

Leonardo’s naval gun and terrestrial turret production was formerly known as Oto Melara, a company owned by Leonardo when it was called Finmeccanica. Today the operation is incorporated into the firm as part of Leonardo’s Defense, Electronics and Security division.

A eventual deal between the two Italian state-controlled firms would mark a continuation of Fincantieri’s campaign to broaden its operations beyond the building of naval, cargo and cruise ships.

In January the company won a nearly 100 million euro contract to supply equipment to the International Thermonuclear Experimental Reactor (ITER), an international program seeking to build an experimental fusion reactor able to produce boundless amounts of clean energy.

The firm previously worked on building a new road bridge in Genoa, Italy, to replace to Morandi bridge which collapsed in 2018, killing 43.

In 2018, Fincantieri tried to buy Italian technology firm Vitrociset, which works on the F-35 program, only for Leonardo to jump in and take over the company first.

Both Fincantieri or Leonardo declined to comment on the reports of talks on a deal concerning naval gun production, but one industry source said that Fincantieri had worked so closely for so long with Leonardo in the sector that a purchase would work smoothly.

The deal could exclude Leonardo’s production of turrets for armored vehicles and tanks which once fell under the remit of Oto Melara and is today grouped in a joint venture between Leonardo and Italian vehicle maker Iveco.

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