By Calvin Biesecker
Italian shipbuilding company Fincantieri said on Monday that it has agreed to acquire United States shipbuilder Manitowac Marine Group (MMG) for $120 million, expanding the company’s naval business overseas.
Lockheed Martin [LMT], which is teamed with MMG’s Marinette Marine Corp. shipyard on the U.S. Navy’s Littoral Combat Ship program, has agreed to be a minority investor with Fincantieri in the pending acquisition. MMG is owned by The Manitowac Company, Inc. [MTW], which plans to focus on its food service and crane businesses.
The purchase has been approved by the boards of both Fincantieri and Manitowac but must still receive clearance from U.S. antitrust regulators and the Committee on Foreign Investment in the United States.
Fincantieri, which owns nine shipyards, eight in Italy, said it plans to invest in modernizing MMG’s facilities, which will improve their efficiency and productivity. The company said the proposed deal responds to the U.S. Navy’s desire for U.S. “shipyards [to] adopt best practices from leading international counterparts.”
Lockheed Martin did not disclose the amount of the investment it plans to make as part of the deal but agreed that the acquisition would serve the needs of its customers.
“This will enhance the Littoral Combat Ship team’s ability to deliver high quality and high value ships to support the U.S. Navy’s critical mission,” Fred Moosally, president of Lockheed Martin’s Maritime Systems & Sensors business, said in a statement.
Indeed, earlier this year Navy Secretary Donald Winter called on U.S. shipbuilders to make the necessary investments “necessary to materially improve the efficiency of its development and production processes.” In a speech to the Sea-Air-Space Symposium, Winter cited examples from shipbuilders in Denmark and Britain who have overcome various challenges, such as competing against low labor costs elsewhere, or demonstrating the ability to build affordable naval ships in low volumes using highly automated processes.
“Our yards can learn from the Danes, the British, and others that the technology is commercially available and applicable to warship production,” Winter said.
MMG, which consists of two Wisconsin-based shipyards, Marinette Marine and Bay Shipbuilding Co., and a topside repair yard in Cleveland, Ohio, has nearly 1,600 employees and had fiscal year 2007 sales of about $320 million. The company’s sales are expected to grow this year, Fincantieri said.
In addition to serving as Lockheed Martin’s shipbuilder for the LCS, MMG also constructs Great Lakes icebreakers for the Coast Guard, ferries, barges and other vessel types.
Fincantieri builds naval vessels, cruise ships and ferries, mega yachts and marine components. The company had over $4 billion in sales last year.
UBS Investment Bank served as Fincantieri’s financial adviser on the deal and The Manitowac Co. was advised by Merrill Lynch.