Italy Aerospace Company Leonardo Approves U.S. IPO of DRS Unit
(Bloomberg) -- Leonardo SpA, Italy’s largest aerospace company, approved a plan for an initial public offering of its U.S.-based defense electronics systems manufacturer.
The board of Rome-based Leonardo gave the green light to a U.S. listing for its DRS division in the New York Stock Exchange, according to a filing. Leonardo may raise up to 1.05 billion euros ($1.27 billion) from the transaction, which may be used to cut debt, Italian daily Il Messaggero reported Friday. Bloomberg News first reported in November that Leonardo was considering an IPO for DRS.
Listing DRS could boost Leonardo’s value, as the unit is worth almost as much as the market capitalization of the entire group. The Italian state controls Leonardo through a 30% stake. Leonardo plans to keep a majority stake in its DRS unit and it sees completion of the IPO process by the end of March, according to a statement.
The pandemic has taken a toll on Leonardo, with the company reporting negative free operating cash flow of 2.6 billion euros at the end of September as the crisis prompted a shift in payments to the end of the year.
Revenue at DRS rose 6.4% to $1.93 billion in the first nine months of 2020, mainly linked to equipment upgrades by the U.S. military, the company said. In the same period, DRS posted earnings before interest, tax and amortization of $114 million.
Prime Minister Mario Draghi earlier this month named Roberto Cingolani, Leonardo’s chief technology and innovation officer, to head a new ministry for ecological transition.
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