Italy’s Leonardo aims to list DRS unit when market conditions right

Italian defence group Leonardo (LDOF.MI) still aims to list its U.S. unit DRS when the right market conditions are in place, Chief Executive Alessandro Profumo said on Friday.

The state-controlled group postponed an initial public offering of a minority stake in DRS in March, due to uncertainty over U.S. defence spending and investors’ concerns about a potential rise in interest rates to fight a surge inflation.

“We have filed for the listing of DRS and we keep updating the documents for the IPO … when market conditions for a successful transaction are there, we will do it,” Profumo told reporters on the sidelines of an annual event in Cernobbio, on Lake Como.

The Italian group had offered 22% of DRS at a price of $20 to $22 per share.

“The valuation’s range for the unit remains unchanged,” Profumo said, adding the group could test the IPO market again, in the coming months.

Profumo said the group still planned to sell its small automation business and declined to comment on a possible disposal of its OTO Melara unit, which makes defence systems for ships.

A source familiar with the matter told Reuters last month that Italian shipbuilder Fincantieri (FCT.MI) was talking to Leonardo about a possible acquisition of OTO Melara.

Any tie-up between Fincantieri and OTO would require the approval of both the Italian government and state lender CDP, which is an investor in the shipbuilder, another source said.

Profumo also said Leonardo would present a plan for its Aerostructure business, which produces parts of aircraft for Boeing (BA.N) and Airbus (AIR.PA), by the end of the year.

The division has been suffering from a fall in demand and is expected to burn through cash this year as some of its plants are operating under their production capacity.