ROME—U.S. defense giant RTX is threatening to take the Italian government to court for blocking the sale of its Italian aerospace unit to French company Safran.
RTX, formerly known as Raytheon Technologies, had planned to sell Microtechnica to Safran. Microtechnica is an Italian company that manufactures parts for Eurofighter jets manufactured by Italy, Germany, the United Kingdom, and Spain.
Microtechnica, currently owned by RTX subsidiary Collins Aerospace and part of Collins’ flight control business, was acquired by Safran in a $1.8 billion deal announced last July. It was scheduled to be sold.
But in November, the Italian government blocked Microtechnica’s plans to sell it. Italian officials aware of the decision said the current geopolitical environment was an inappropriate time for such a deal, as it could jeopardize access to key components of the Italian military. .
To block the sale, Italy invoked the so-called Golden Power Law, which allows the government to stop foreign buyers from acquiring strategic domestic companies.
At the time, Safran CEO Olivier Andries told the Financial Times that he opposed a veto. “They assume the worst about our intentions not to fairly support or prioritize Eurofighter,” the news agency quoted him as saying.
RTX and Safran are now preparing to challenge the veto in court, said Jeff Shockey, head of global government relations at RTX.
“We and Safran plan to appeal, but this is necessary to preserve global trade,” he said in a statement. “We accept the decision of the Italian government. However, we are confident that this transaction is good for Microtechnica, its customers, employees and all other parties involved.
“We therefore remain fully committed to this transaction and look forward to finding a solution that addresses the concerns of the Italian government.”
But if the parties involved can reach an agreement outside of court that allays the government’s concerns, RTX is willing to do so, he said. “We look forward to the opportunity to resolve the issue through a constructive dialogue with the Italian government outside of the appeals process.”
Italian trade union leaders, who learned of Microtechnica management’s plans to appeal during a meeting in Turin, Italy, on Thursday, are backing the legal challenge.
“What are the motives for this unexpected decision by the Italian government?” said Eddie Rezzi, Turin representative of the FIOM union, which represents more than 600 Microtecnica employees in northern Italy.
“Who’s taking care of this? Employees are caught in the middle,” Rezzi added. “Microtechnica is healthy and profitable, but it is unprofessional for the defense minister to do so.” [Guido] closet and prime minister [Giorgia Meloni] It does not account for this choice, which could have significant economic consequences for the regions of Lombardy and Piedmont. ”
Safran, which last July announced plans to acquire Collins Aerospace’s actuation and flight control business, said it would acquire eight facilities in France, the United Kingdom, Italy and Asia and employ approximately 3,700 people. These locations are expected to generate approximately $1.5 billion in sales in 2024.
Italy’s Golden Power Regulation, introduced in 2012, is typically used to prevent China from acquiring strategic companies. In 2021, Italian police raided an Italian drone manufacturer that allegedly circumvented Golden Power sanctions by selling to China without warning the Italian government.
According to Defense News’ Top 100 list, RTX is the second largest company in the world based on defense revenue. Saffron was ranked 28th on the list.
Tom Kington is Defense News’ Italy correspondent.