European defence suffers from US-EU arms deal, Leonardo slips in Milan

(Il Sole 24 Ore Radiocor) - The European defence industry is suffering, penalised by the agreement on tariffs between the US and the EU. In detail, the agreement envisages the obligation for the Europeans to buy 750 billion dollars of American energy and invest another 600 billion, in addition to the supply of significant quantities of weapons. "We don't know what the exact figure is, but we produce the best military equipment in the world," said the US president, Donald Trump. Thus, in Milan Leonardo - Finmeccanica is at the tail end of the list, in Frankfurt suffers Rheinmetall , in Paris Thales is down and in Stockholm Saab is down.

Stocks in the sector have risen sharply since the beginning of the year, driven by the ReArm Eu plan proposed by the European Commission in March to strengthen the Union's military capabilities. The aim was to accelerate European strategic autonomy with new investments in technology, armaments production and cooperation between member states. Thus since the beginning of 2025, Leonardo has progressed by over 80%, Rheinmetall by over 177%, Thales by over 67% and Saab by over 122%. Now, however, the military issue seems to have taken a new turn, with the investments promised to the United States threatening the sector's profits and impacting stocks.

Returning to Leonardo, the stock is also affected by the latest rumours that Iveco Group is close to selling its defence division to the joint venture formed by the company led by Roberto Cingolani and Rheinmetall. According to Bloomberg, the deal would be at an advanced stage. The deal would meet the demands of the Italian government and pave the way for the sale of the rest of the commercial trucking division toTata Motors. The agreement between Iveco and Leonardo could therefore be reached in the coming weeks, while the spin-off option remains open in the background. According to Intermonte analysts, "the news gives a higher probability to the sale of Idv to Leonardo-Rheinmetall for a valuation of around €1.6 billion than our base case scenario of a spin-off with a valuation of around €2.17 billion. However, this scenario seems to be prodromal and accelerates the hypothesis of the sale of the ex-defence business, with Tata Motors apparently in pole position'.