Fincantieri and Naval Group sign the joint venture agreement

15 June 2019

By Luca Peruzzi

The “Poseidon” project strongly supported by the CEOs of Fincantieri, Giuseppe Bono, and Naval Group, Hervé Guillou, is proceeding according to what was announced on October 23rd during Euronaval.

On June 14 the managers of the two companies signed the Alliance Cooperation Agreement, on board the ITN frigate Federico Martinengo, docked at La Spezia, which defines the operating terms for the establishment of an equal joint venture (50/50).

The signing on board of a unit of the Italian-French FREMM programme represents the solidity of the twenty-year collaboration between the two countries, their industries and the national navies, the two CEOs underlined.

The agreement, which follows the approval of the respective boards of directors, substantiates the contents of the “Poseidon” project and paves the way “for the project to strengthen the military naval cooperation of the two groups and for the creation of a more efficient and competitive European shipbuilding industry “, remarked Giuseppe Bono just before the event.

The JV will deal with surface units, nuclear and underwater units and systems remaining outside its perimeter, as well as cruise and oil & gas vessels.

The JV will be governed by Italian law, and will be established in the coming months, shortly after summer according to some qualified sources, and in any case by the end of the year, and will be subject to the usual conditions provided for this type of operation and for obtaining the authorizations of the competent authorities. The JV would not require the approval of the antitrust authority, as it is an entity that deals with national security.

Through the joint venture, Fincantieri and Naval Group will share best practices, jointly conduct targeted R&D activities, optimize purchasing policies, jointly prepare offers for binational programs and for export. Looking at the available market, the Naval Group CEO highlighted how strong is the competition worldwide and how it is limited by excluded markets like Russia and China, with the consequence that the JV could be able to guarantee the two mother companies an accessible market share of 25-28%.

Looking to the structure and governance of the new JV, this will be governed by a shareholders’ agreement and will feature a Board of Directors made of six members, three appointed by each company. As for operations, the first three-year term will see Fincantieri express the Non-Executive President represented by the CEO of Fincantieri Giuseppe Bono, while the Managing Director will be expressed by Naval Group in the person of Claude Centofanti. The Chief Operating Officer (COO) will be Enrico Bonetti while the Sales and Marketing Director will be Sabrina Sanguineti, both from Fincantieri. The Chief Financial Officer (CFO) Dr. Emmanuel Diot comes from Naval Group.

The new JV Board is composed by Giuseppe Bono, who will become the JV President, and Hervé Guillou Naval, together with Alberto Maestrini, General Manager of Fincantieri and Jean-Yves Battesti, General Secretary of Naval Group, together with the aforementioned Claude Centofanti and Enrico Bonetti.

The company will be based in Genova, with a subsidiary in France, in Ollioules, near Toulon; the Naval Group facility located there is at the forefront in the field of naval systems and in the development of innovative technologies, and is expected to host the Coordination and Development Center of engineering in support of the JV.

According to Bono and Guillou the joint venture, which will consist initially of a few dozen employees, “is a first step in a wider process of consolidation of European shipbuilding” that the two managers started pursuing five years ago to get together an added value, not only on the bi-national and European market but also on the export market. Both CEOs remarked that they expect a lot from this alliance, such as an overall efficiency increase of 10-15%. On behalf of both companies Guillou thanked the respective governments and their representatives, who provided constant and unreserved support to the common project. At the moment no details have been provided on the subsequent development steps of the JV.

Looking at the first programmes that should involve the JV Naval Group CEO highlighted the Horizon class destroyers Mid-Life Update programme; new buildings where not directly mentioned, but it is known that French and Italian navies are working on the requirement for the so-called “European Patrol Corvette” project for a patrol unit of around 3,000 tonnes, whose construction should see the light in the period 2025-2030. This is a programme that will require the involvement of a third European country in order to be supported as a PESCO project.

The Fincantieri CEO remarked that customers look at the platform provider as prime contractor, and the JV will provide both the platform and the combat system; to that end Bono announced that agreements have already been made with both Leonardo and Thales. The customer will make his choice, and if he does not have a preference, the best cost/effectiveness solution will be chose. Considering the domestic market, countries usually make a national choice as it was for the FREMM programme. Naval Group CEO, whose group realizes the command management system (CMS) unlike Fincantieri, underlined that his company is open to collaborations with Leonardo. Guillou also expressed the hope that an industrial convergence in this field will take place between the two countries, further strengthening their export capacities.

With regard to the research and development “as an engine to develop capacity and therefore competition in the markets”, the Naval Group CEO highlighted that there are already five projects in place, one of which is European the other being bilateral, while the export sector, “can be attacked with different rules, depending on the case and the influence in the area”. Still on the international market, Giuseppe Bono stressed that “strong competition requires the exploitation of the local presence of the two groups with their own capabilities”. In this regard, Fincantieri can offer a network of construction sites worldwide thanks to its subsidiaries such as Vard’s of facilities.

To read the Press release lease click here

Photos by Luca Peruzzi