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Leonardo postponed DRS IPO due to U.S. cuts in defence spending - CEO to newspaper

·1-min read
FILE PHOTO: FILE PHOTO: FILE PHOTO: A logo of defence group Leonardo is pictured on their booth during EBACE in Geneva

ROME (Reuters) - Italian state-controlled defence group Leonardo decided to postpone the U.S. listing of its electronics unit due to expected cuts to U.S. defence spending, its chief executive was quoted as saying by a newspaper on Thursday.

"The decision was dictated by heavy cuts to spending," Alessandro Profumo was quoted as saying by La Stampa daily.

He added the group was "not giving up the listing, it is only delayed".

On Wednesday, Leonardo said it was putting on hold the initial public offering (IPO) of DRS Inc, which counts the U.S. military as a customer, due to adverse market conditions that did not allow for an adequate valuation.

Leonardo, which had been looking to complete the listing by March-end, was offering about 22% of DRS on the New York stock exchange, valuing the stake at up to $702 million.

U.S. President Joe Biden is not expected to send his first budget request to Congress for several weeks, leaving the question of whether he will cut defence spending unanswered for the time being.

His predecessor, Donald Trump, had increased it by 19% to $740 billion in the last three years of his administration.

Shares in Leonardo closed down 6% after falling to a loss of 10% at one point on Wednesday.

"We will bounce back," Profumo was quoted as saying.

(Reporting by Maria Pia Quaglia; Writing by Giulia Segreti; Editing by Christopher Cushing)