ROME — A debate in Italy over selling a stake in cannon-maker Oto Melara is rumbling on with a junior defense minister backing Germany’s Rheinmetall, and the CEO of Leonardo, which owns Oto Melara, calling French-German joint venture KNDS the “ideal choice.”

Politicians, unionists and industrialists have all joined a sometimes heated discussion about Oto Melara ever since state-controlled Leonardo said last year it wanted to sell a stake in the firm to focus on other activities including electronics and helicopters.

Reports put KNDS — the alliance of Germany’s Krauss-Maffei Wegmann and France’s Nexter — as the likely buyer.

That drew fire from politicians on both the left and right who bemoaned the selling overseas of a firm which is a world leader in naval cannons.

Many gave their backing to a sale of Oto Melara to Italian state-controlled naval yard Fincantieri, which was said to be interested.

Italian defense undersecretary Giorgio Mulé told Defense News he was not keen on seeing Fincantieri try to take over Oto Melara since it would lead to competition between it and Leonardo.

“The two companies cannot be in competition, the role of the government in defense politics must be to stop a derby between the firms,” he said, adding Oto Melara “must follow a vision set down by the government.”

Mulé said a possible solution could be a joint venture with Germany’s Rheinmetall taking a 49 percent stake in Oto Melara and Leonardo retaining 51 percent.

He described Oto Melara as “strategic” and in line for a large increase in orders as defense spending in Europe grows following Russia’s invasion of Ukraine.

Last month, Rheinmetall CEO Armin Papperger told Italy’s Il Sole 24 Ore newspaper he was keen on taking a stake in Oto Melara, including a minority stake, and envisaged the firm working on the German Lynx infantry fighting vehicle program as a result.

Speaking to reporters in Rome on Tuesday, Leonardo CEO Alessandro Profumo said “Rheinmetall has never made any kind of formal offer for Oto Melara.”

Profumo said KNDS would instead be the best partner for Oto Melara.

“It is an ideal partner,” he said, adding: “Based on what they have proposed they would want to jointly develop a new infantry fighting vehicle which would have international distribution.”

He declined to say whether he believed KNDS should be a majority or minority stake holder in Oto Melara.

“I don’t want to say anything, let’s see what happens during the process,” he said.

Tom Kington is the Italy correspondent for Defense News.

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