Fincantieri Acquires Manitowoc Marine
“Cost Pressures Force European Aerospace to Look Outside Europe” has discussed the effects of exchange rates on the European aerospace industry, while “EU Procurement Challenges & Defense Weakness Debated (updated)” offered some expert analysis of Europe’s shrunken defense budgets and the effect on industry. When set beside an American defense industry that continues to receive investment as a national priority, and a Dollar to Euro ratio that makes operations in a “dollar zone” attractive, European firms are looking across the Atlantic for complementary acquisitions. In recent months, EADS bought PlantCML, and moved to make Mobile, Alabama its assembly line for Airbus A330F freighters; meanwhile, Italy’s Finmeccanica bought DRS.
Now Italian shipbuilder Fincantieri – Cantieri Navali Italiani S.p.A. has signed a definitive acquisition agreement to acquire the Manitowoc Marine Group (MMG), from its parent, The Manitowoc Company, Inc., for about $120 Million in cash. Lockheed Martin Corporation has agreed to be a minority investor with Fincantieri in the proposed acquisition.
Fincantieri is Italy’s leading shipbuilder, building a range of ships from aircraft carriers and frigates to offshore patrol vessels. MMG is a leading mid-tier American shipbuilder, who has worked on commercial, Coast Guard, and naval programs…
The keel for Lockheed Martin’s LCS 1 Freedom was laid by MMG, for instance, at Marinette Marine Corporation in Marinette, WI. The firm also includes the Bay Shipbuilding Company in Sturgeon Bay, WI, and a topside repair yard in Cleveland, OH. It employs a workforce of almost 1,600, and generated FY 2007 generated revenues of about $320 Million.
UBS Investment Bank is acting as sole financial advisor to Fincantieri, with Morgan Lewis and Bockius LLP as legal advisor and Pricewaterhouse Coopers TS as due diligence advisor. The $120 million deal is subject to possible closing adjustments, and must also receive American antitrust clearance and review by the Committee on Foreign Investment in the U.S.
If the deal does close, a 3rd trend will enter the picture. European shipyards are widely acknowledged as more modern than most of their American counterparts, with correspondingly greater automation and efficiency. Fincantieri’s release speaks directly to that point:
“The acquisition of MMG responds to the U.S. Navy’s expressed desires that U.S. shipyards adopt best practices from leading international counterparts. With a proven record of delivering complex military and commercial ships, on time and on budget at a firm fixed price, Fincantieri will bring to the U.S. market its extensive expertise in modern ship design and construction methods, thus greatly enhancing the technological capability and production processes at the yards of MMG.
Fincantieri plans to invest in modernizing MMG’s facilities, thereby increasing efficiency and productivity…”
A report from Reuters says $100 million will be invested in those modernizations. The net effect would be to give Fincantieri 2 competitive frigate offerings in the international marketplace: the Franco-Italian FREMM multi-role design (Italy, DCNS builds for France and Morocco), and the Team Lockheed Littoral Combat Ship design (USA, Israel).