Italy Rejects Safran's $1.8 Billion Acquisition of Collins Aerospace

21 Nov, 2023

Italy Rejects Safran's $1.8 Billion Acquisition of Collins Aerospace

Italy's decision to block French group Safran's $1.8 billion bid for Collins Aerospace's flight control systems arm stems from concerns over the supply chain for armed forces and contracts related to the Eurofighter program, according to sources within the Italian government.

Rome utilized its "golden power" to veto Safran's acquisition of Microtecnica, Collins Aerospace's Italian subsidiary, considering it a strategic asset deserving protection.

This move by Giorgia Meloni's government is a rare instance of resistance against a European Union entity. Safran, primarily owned by the French government with an 11.2% stake, expressed commitment to the transaction despite Rome's intervention, stating its determination to explore the next steps.

However, Safran declined further comment, and the lack of guarantees from the company to preserve production lines in Italy became a critical point for the Italian government. This lack of assurance was a reason behind Italy's concern about potential disruptions in the supply chain.

Italy also engaged in discussions with the German government, raising concerns about how the Safran deal might impact supplies for Eurofighter and Tornado jet fighter programs. The lack of prior consultation between Italy and France regarding the veto raised eyebrows, especially given Microtecnica's current ownership by a U.S. company.

Experts noted the unusual nature of Italy's veto against buyers from EU and NATO countries. This move marks a deviation from past instances where Italian authorities primarily vetoed acquisitions by Chinese and Russian companies following the introduction of "golden powers" in 2012.

Safran's Chief Executive expressed surprise at the decision, highlighting the company's existing role as a supplier to the Eurofighter and various Italian defense programs through its subsidiaries.

The episode sheds light on the complexities within European partnerships, especially concerning defense and technology cooperation, as political figures from Italy and Germany plan discussions. This event also draws attention to the competitive dynamics between the Eurofighter and the French-made Rafale in the global export market.