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Franco-German KNDS interested in Leonardo's units - source

·2-min read

By Giulia Segreti and Giuseppe Fonte

ROME (Reuters) - Franco-German KMW+Nexter Defence Systems (KNDS) is interested in buying Leonardo's OTO Melara and Wass units, an Italian political source said on Friday, adding that the government wanted to play a key role in the negotiations.

Italian shipbuilder Fincantieri is also still in the running to buy the two Leonardo units and talks are at an early stage, the source, who is involved in the discussions, also told Reuters.

As part of the bid, KNDS has offered to include Italy in the Main Ground Combat System (MGCS) tank project, more popularly known as the "tank of the future", said Italian newspaper La Repubblica, which first reported the news.

KNDS has also given assurances that it would maintain employment levels at OTO Melara and Wass, which make naval guns and torpedoes respectively, the report added.

Leonardo and Fincantieri declined to comment, KNDS was not available to comment.

The Italian source said the government was closely following the talks as any sale would have implications for Italian government-funded programmes for the army.

Rome reserves the right to shield companies deemed of strategic importance from foreign bids. The so-called "golden powers" apply also to EU groups under a temporary framework in place until December 31, which a second political source said Rome would likely extend to June 30, 2022.

Leonardo does not provide financial data for OTO Melara and Wass but brokerage Banca Akros said in a report that the assets could be valued at at least 520-560 million euros ($595-$641 million) based on the assumption of combined revenue of 520 million euros and an operating profit of 56 million euros.

La Repubblica described KNDS' offer as "more consistent" than Fincantieri's, and said it was worth up to three times more.

Unions have asked both the government and Leonardo to start a dialogue over the future of OTO Melara and Wass, which employ more than 1,500 workers at four Italian plants.

($1 = 0.8735 euros)

(Additional reporting by Francesca Landini and Elisa Anzolin in Milan; Editing by Giselda Vagnoni and Kirsten Donovan)

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