ROME (Reuters) -Italian shipbuilder Fincantieri is set to buy Leonardo's submarine business, known as Whitehead Alenia Sistemi Subacquei (WASS), in a deal expected to be announced later on Thursday, two sources close to the situation said.
Fincantieri will be financing the acquisition, worth 250-300 million euros ($268-$322 million) through a recapitalisation of up to 500 million euros, one of the sources told Reuters.
The deal fits with Fincantieri's broader strategy to grow through acquisitions, focusing more on defence - now accounting for some 25% of its revenues - as well as strengthening its position in the subsea business.
The additional funds beyond the value of the deal will be used by the shipbuilder to further develop its defence business, a fast-growing sector on which the state-controlled company is betting, the source added.
State lender Cassa Depositi e Prestiti (CDP) intends to subscribe to the capital increase to finance the deal, Italian financial daily Il Sole 24 ore reported earlier on Thursday.
Shares in the shipbuilder - which has a market capitalisation of 1.15 billion euros - were down around 9% at 1030 GMT, with analysts concerned about the size of the proposed recapitalisation.
Negotiations between the two state-controlled groups had slowed down due to "temporary resistance" from internal managers, Leonardo Chief Executive Roberto Cingolani told reporters in mid-April.