Leonardo focuses on naval electronics and buys a 30% stake in Gem.
The company from San Benedetto del Tronto operates in fields complementary to those of the aerospace and defense giant and specializes in the production of small and medium-sized 3D radars, electro-optical sensors, and inertial systems for the maritime, avionics, and land sectors.
The operation, explains a statement, allows the group led by CEO Alessandro Profumo to strengthen itself in the sector, particularly in short and medium-range sensors for navigation, maritime, coastal, and airport surveillance.
Furthermore, the agreement includes a call and put option mechanism to be exercised in 2024, which would allow Leonardo to acquire control of the Marche-based company.
Thus, the former Finmeccanica’s interest in the naval sector continues. Just last year Leonardo had signed a strategic agreement with Intermarine, an Italian shipyard that develops, designs, and produces military and civilian ships and naval systems and components.
And today Leonardo’s stock rises by 1.2% at Piazza Affari following the acquisition announced this morning.
All the details.
LEONARDO’S PARTICIPATION
Leonardo has acquired a shareholding equal to 30% of the share capital of Gem elettronica.
THE OBJECTIVE
The operation allows the former Finmeccanica to strengthen itself in the naval sector, particularly in short and medium-range sensors for navigation, maritime, coastal, and airport surveillance.
Gem elettronica Srl indeed operates in businesses complementary to those of Leonardo with innovative and competitive systems such as navigation and coastal surveillance radars, electro-optical devices, and high-end fiber optic inertial systems.
GEM’S CAPABILITIES
The company is also active in the maritime surveillance and border market.
Gem has capabilities for producing critical components for Leonardo’s products, highly specialized resources in radar technology and electronics. It also boasts an advanced R&D center where new quantum technologies for navigation and communication are tested.
THE COMMERCIAL AGREEMENT
Simultaneously with the signing of the acquisition operation, Leonardo and Gem also signed a commercial and industrial agreement aimed at developing synergies in some areas of Gem’s expertise complementary to the business of the Monte Grappa square group, proposing promotional activities in the markets and defining and implementing joint research and development projects. Among the areas of collaboration are the maritime and naval domain, critical infrastructure control, and applications for land platforms.
WHAT GEM ELETTRONICA DOES
Founded in 1977, Gem elettronica has about 130 employees and is characterized by production carried out almost exclusively in-house.
Active in both civil and military markets, the company headquartered in San Benedetto del Tronto (AP) boasts a presence both in Italy and abroad and important collaborations with national and international players.
THE CLIENTS
Among the Italian clients are: Ministry of Defense, Navy, Army, Carabinieri, Police, Port Authorities – Coast Guard, and Financial Police.
But Gem elettronica also exports abroad: Albania; Argentina; Bangladesh; China; Croatia; Faroe Islands; France; Georgia; Germany; United Kingdom; Greece; Netherlands; India; Indonesia; Libya; Malta; Malaysia; Morocco; Norway; Oman; Pakistan; Qatar; Romania; Singapore; Sri Lanka; Turkey; United Arab Emirates; USA and Venezuela.
GEM’S COLLABORATION WITH LEONARDO ON FREMM AND NAVAL LAW
As a supplier, Gem has collaborated for years with Leonardo on numerous projects, including the Fremm program and Naval Law, the modernization plan of the Italian Navy fleet.
Leonardo is indeed a 49% partner in the JV with Fincantieri Orizzonte Sistemi Navali (Ons). Osn acts as the prime contractor for Italy in the Italo-French Fremm program for the construction of 10 frigates for the Navy (two of which were sold to Egypt), with Fincantieri as the platform design authority and Leonardo as the supplier of the Combat System.
THE SHAREHOLDERS
With a share capital of 4,500,000 euros, the company is 70% controlled by Gem Investment srl. Leonardo now owns the remaining 30% stake. As mentioned, the agreement includes a call and put option mechanism to be exercised in 2024, which would allow Leonardo to acquire control of the company.
The board of directors includes, besides the chairman Antonio Bontempi: Giovanni Soccodato representing Leonardo and Giuseppe Merlini, sole director of the company.
THE FIGURES
The Marche-based Gem recorded in 2019 a turnover of 15,426,530 euros, slightly up from 15,119,159 euros in 2018. The profit almost doubled to 790,310 euros (compared to 421,938 euros in 2018). Production costs stood at 4,323,512 euros.
The company boasts total tangible fixed assets valued at 7,331,299 euros, and total debts of 30,374,582 euros.
SUCCESSES IN THE ITALIAN MARKET
In the financial statement closed on December 31, 2019, the company states that most of the programs included in the order plan have experienced delays but that it is able to manage them with the goal of acquiring the related contracts.
In particular, the Italian market has “given great satisfaction as it showed interest in newly developed innovative products such as Columbus, with decisions” that see the company “for the first time onboard medium tonnage ships with 3D discovery Radar.”
Also a contract from the Navy which will proceed with the purchase of at least 5 solid-state coastal surveillance Radars to replace old-generation radars.
Moreover, 2019 saw Gem supply equipment to the Port Authority, particularly installed aboard the Fiorillo ship.
From the foreign market, the Marche company expects orders from the Far East: Malaysia, Indonesia, and Taiwan. Additionally, Gem has also focused on the Middle East (Saudi Arabia, Oman, and UAE) and India.
THE AGREEMENT BETWEEN LEONARDO AND INTERMARINE
Finally, the participation in Gem represents a further step forward for the former Finmeccanica in the naval sector.
Last June Leonardo had indeed signed a strategic research and development agreement with Intermarine for new technologies functional to the realization of next-generation products and commercial collaboration.
The goal of the joint work is participation in next-generation programs and renewal of fleets of minehunter ships, fast patrol boats, and hydrographic ships.
Moreover, the research centers and Italian production plants of the two companies will invest in robotics, unmanned technology, and naval engineering, essential and necessary aspects for the production of multi-role units both coastal and offshore.
