ROME — Prospective buyers are lining up to acquire Iveco Defence Vehicles – Italy’s biggest military vehicle maker – and the Italian government may struggle to stop it being sold overseas, a source has told Defense News.
The chief supplier of fighting vehicles to the Italian army, IDV could be sold by year’s end by its parent company Iveco, which is owned by the Exor Group, which is the largest shareholder in car maker Stellantis and controlled by the Italian Agnelli family.
On May 15 Iveco said IDV would be spun off this year, with a possible sale to follow.
“By the end of the year the spin-off will start and in the meantime offers to buy the firm will be evaluated,” said a spokesperson.
“We have had preliminary offers from various strategic players,” said CFO Anna Tanganelli.
Last year IDV saw revenue rise by 15% to €1.1 billion ($1.3 billion) as land-warfare budgets grow around the world in response to the Ukraine war.
One firm has publicly thrown its hat in the ring to date. On May 8, the CEO of Italian defense giant Leonardo, Roberto Cingolani, said Leonardo had put in a joint offer with Germany’s Rheinmetall.
Leonardo and Rheinmetall are already in business with a joint venture announced last year to build 1,050 new infantry fighting vehicles for the Italian army based on the Rheinmetall Lynx and 132 tanks based on Rheinmetall’s under-development Panther KF51.
IDV also has a slice of the huge Italian vehicle order. In December it said it had signed a deal with Leonardo to take 12-15% of the development and production work on the deal, which has been valued at €23 billion.
Leonardo and IDV already had a longstanding joint venture in place, called CIO, which builds VBM wheeled fighting vehicles and wheeled Centauro tanks for the Italian army.
An industrial source said Leonardo offered to buy IDV for €750 million last year but was turned down. “They could have had it if they’d offered a billion, but they didn’t,” said the source.
Meanwhile, numerous firms from around the world are reportedly ready to put in offers for IDV, with Spanish media suggesting Spain‘s Indra is ready to pay €1 billion, while U.S. funds and French-German consortium KNDS also reportedly keen.
BAE Systems will be seen as possible bidder after it announced on Thursday a partnership between BAE Systems Hägglunds and IDV to offer its BvS10 all-terrain vehicle to the Italian army, with design and manufacturing to happen in Italy.
BAE already builds amphibious vehicles with IDV for the U.S. Marines.
The industrial source said however that given IDV’s ties to the Italian military and to Leonardo, there would be reluctance to see it sold to an overseas buyer.
“The Italian army and members of the government would like IDV to stay Italian,” said the source, who spoke on condition of anonymity to discuss internal deliberations.
But Cingolani has suggested Leonardo will be reluctant to pay top dollar just to keep IDV Italian, and Exor will likely be seeking maximum profit on the sale of a firm which is flush with work, knowing the firms outside Europe are increasingly interested in buying EU businesses as the bloc builds up its defense war chest.
One solution being touted in the Italian media is that the Italian government use its so-called ‘Golden Power’ law, which can be used to control or block the sale of strategic Italian firms.
But an Italian expert on the law said it might not be applicable in the case of IDV.
“The law is usually used to impose conditions for a new buyer, as occurred when GE bought Italian firm Avio Aero, or to stop a purchase by a buyer considered potentially hostile. But there has never been a case when it was used to exclude one or more bidders in a group of bidders,” said the source, who declined to be named.
“If the Italian government, which has a controlling stake in Leonardo, blocks a sale to Indra for example, could that be legally challenged as market interference? Indra is not China,” said the source.
Tom Kington is the Italy correspondent for Defense News.
