Fincantieri submarines 'marry' Wass torpedoes: development of underwater systems strengthened

Roberto Cingolani, Leonardo's CEO since 9 May last year, commented on the agreement with Fincantieri as follows: "The sale of Underwater armaments & Systems is part of Leonardo's business portfolio rationalisation plan. The initiative gives further impetus to the collaboration between Leonardo and Fincantieri".

Wass is headquartered in Livorno and has a second site in Pozzuoli, and operates in the underwater defence industry, producing torpedoes, countermeasures and sonar, with about 450 employees. Many years ago it was a mixed public-private company, between Iri's Finmeccanica and Fiat, at the time it was called Whitehead Alenia sistemi subacquei, then it became entirely part of the Finmeccanica group and kept the name Wass. In particular, Wass is responsible for the development of the Black Shark torpedoes, those that will equip the Italian Navy's U212 NFS submarines built by Fincantieri.

I siluri Black Shark di Wass . EPA/HUMBERTO GOMEZ

Another product is the Mu90 light torpedo, jointly produced with two French companies. The business line sold through Wass also includes the 50 per cent stake in Geie EuroTorp, established with the French Naval Group and Thales, which designs and manufactures the Mu90 torpedo.

During the management of Mauro Moretti, who changed the name of Finmeccanica to Leonardo and concentrated a large part of the operating companies and companies in the 'one company' parent company, Wass was merged by incorporation into Leonardo. As of 1 January 2016, the activities of Wass were merged into the Defence Systems Division, within the Electronics, Defence and Security Systems sector of Leonardo, together with Oto Melara of La Spezia, which produces land armaments (armoured and tracked vehicles, guns, bombs).

The agreement with Fincantieri does not include Oto Melara, which Leonardo aims to develop with the army's planned new orders to renew the fleet of Ariete heavy tanks and Dardo light armoured vehicles, through agreements with other foreign groups: there are negotiations with the Franco-German Knds and contacts with the German Rheinmetall.

Leonardo reported that in 2023 the Uas business line, i.e. the business transferred to Fincantieri, generated revenues of around EUR 160 million and an Ebitda (gross operating margin) of EUR 34 million.

Leonardo was assisted by Rothschild & Co. as financial advisor, Studio Cappelli RCCD as legal advisor, and PwC in the preparation of the financial documentation of the branch. Ubs supported Leonardo's Risk Control Committee in the evaluation of the transaction.

Fincantieri was supported by Deutsche Bank Ag, Milan branch, as sole financial advisor and by Deloitte for due diligence.

A manager from the Leonardo group explains that the integration of torpedo and submarine production could increase Wass's development capabilities and points out that integration of this kind is a model already followed in other countries, such as France, Australia and Chile, and gives good results.

Wass is no longer part of the former Finmeccanica's strategy, while for Fincantieri there will be an integration of submarine production and torpedo armament. Moreover, the operation should allow the development of underwater systems, from sonar to other systems. Fincantieri's CEO Folgiero said: 'The operation represents a milestone in our equity story and in the implementation of Fincantieri's underwater strategy.

For Fincantieri, which has closed its last two balance sheets in the red, there is now the challenge of convincing shareholders that the capital increase in support of the takeover is beneficial to shareholders: shares lost 7.56% to EUR 0.624 at the announcement of the capital increase on 9 May.