ROME — Italian defense firm Leonardo has called off plans to list its U.S. subsidiary DRS on the New York Stock Exchange, citing “adverse market conditions.”
Leonardo planned to list about 22 percent of the electronics firm on the New York Stock Exchange by the end of March, hoping to raise up to $702 million for debt reduction and acquisitions. But in a statement on Wednesday, the firm said: “Notwithstanding investor interest within the price range during the course of the roadshow, adverse market conditions did not allow an adequate valuation of DRS.”
Shares in the company fell more than 10 percent on the Italian Bourse — Italy’s stock exchange based in Milan — after the announcement. Observers linked the fall to the possible slowdown in U.S. defense spending as the new administration focuses on stimulus spending.
A middle-tier defense electronics firm that supplies the U.S. military, DRS lists its main product lines as sensing, electronic warfare, cybersecurity, network computing, communications, force protection, and electrical power conversion and propulsion.
Leonardo purchased the firm in 2008 for $5.2 billion, arranging proxy agreements with the U.S. government to allow the firm to work on sensitive programs.
Last year, DRS saw €2.4 billion (U.S. $2.9 billion) in revenue and €2.7 billion in new orders, including a contract for the supply of equipment, switchboards and propulsion controls for the CVN 80 and CVN 81 ships for the U.S. Navy.
The initial public offering on the stock exchange was meant to help drive down Leonardo’s €3.3 billion debt.
“The IPO will potentially be revisited when market conditions are more favorable and a successful IPO at an appropriate valuation for this strategic business can be achieved,” the firm said.
Tom Kington is the Italy correspondent for Defense News.
