France, Italy Pull Fincantieri Shipyard Deal on Pandemic
(Bloomberg) -- Italy and France scrapped a long-planned tie-up between their Fincantieri SpA and Chantiers de l’Atlantique shipyards, blaming the economic downturn and a failure to get European antitrust approval.
“The economic environment no longer permits” the combination, France’s finance ministry and Italy’s economic development ministry said in a joint statement Wednesday. Bloomberg News reported earlier on the collapse of the deal.
The decision was made to allow the two companies to focus on getting through the pandemic and new projects, according to the governments, who also pointed to “an absence” of a ruling on the deal by the European competition authority.
“France will remain the main shareholder in Chantiers de l’Atlantique and will support the company for as long as the crisis lasts,” it said. A French finance ministry official said separately that the shipyard’s order books remain significant, with no cancellations recorded.
The deal, agreed more than three years ago with the aim of creating a European shipbuilding champion, was soon hamstrung by political and antitrust concerns. After extending the deadline five times , the merger looked to be increasingly compromised in recent months because of opposition from European Union antitrust regulators and the pandemic, which has decimated the cruise industry and hurt orders for new ships.
The European Commission in 2019 launched a probe into the deal, warning that the plan could be a serious blow to competition in a cruise-ship market that isn’t likely to see any new rivals emerge.
The Commission cited several serious concerns, saying the “very complex nature” of cruise shipbuilding made it difficult to enter the market and that buyers could be left at the mercy of a small number of suppliers.
The planned tie-up has also been fraught politically. Chantiers de l’Atlantique emerged from the bankruptcy of STX Corporation in 2016. When STX France was put up for sale, Fincantieri showed interest, but French President Emmanuel Macron set conditions on a bid for a majority stake, citing concerns the Italian firm might transfer French technology to a Chinese partner.
The pandemic has also taken a toll on prospects for a deal. Fincantieri is considering a capital increase of as much as 1.5 billion euros ($1.8 billion) that could be approved early this year, Bloomberg reported last year.
The Italian shipbuilder said in November that production volumes fell 19% compared with previous estimates which did not take the Covid-19 impact into account. Net debt nearly doubled to 1.43 billion euros compared with 2019.
Italy’s state-backed lender Cassa Depositi e Prestiti SpA holds a 71% stake in the company, while the rest of the shares are held by private investors. The shipyard is headquartered in the northern city of Trieste.
©2021 Bloomberg L.P.