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France, Italy Said to Be Near Deal Over STX Shipyard

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September 25, 2017

Sections of the keel of the Oasis 4 class ship are seen at the STX Les Chantiers de l’Atlantique shipyard site in Saint-Nazaire, western France, October 20, 2016. REUTERS/Stephane Mahe

By John Follain and Helene Fouquet (Bloomberg) — French President Emmanuel Macron and Italian Prime Minister Paolo Gentiloni are close to an accord that would give Fincantieri SpA majority control of the French shipyard STX, ending a diplomatic dispute between the two countries.

According to Italian and French officials, the two leaders could sign the deal at a bilateral summit Wednesday in Lyon, France. The accord would give Fincantieri a little over 50 percent of the Saint-Nazaire shipyard on the Atlantic coast, said two Italian officials who could not be named because negotiations are confidential.

“If the outcome is majority control for the Italians, then this spat has been a bit of a waste of time,” Marc Ostwald, global strategist at ADM Investor Services in London, said in a telephone interview. “But the rapprochement is definitely positive. Macron wants to reform the European Union, and he needs the Italians on board. Perhaps he’s also thinking that Italian investors, from inside the EU, are less worrying than, say, the Chinese.”

The agreement would also include guarantees to the French similar to those in a previous accord involving job-levels, infrastructure investment and know-how, said an Italian industry official, who also asked not to be named because the talks are private. CR Trieste, which under the previous deal agreed to buy about 6 percent of STX, was no longer involved in the new agreement, the industry official said.

Relations between the two nations soured in August after Macron went back on an agreement reached under his predecessor Francois Hollande that gave Fincantieri control of STX. About a month before Macron was elected, the Italian company had agreed to buy 48 percent of the shipbuilder from South Korea’s STX Offshore & Shipbuilding Co. Ltd, with CR Trieste also holding its quota.

Spokesmen for Gentiloni, Economic Development Minister Carlo Calenda and Fincantieri declined to comment. The Italian Treasury did not respond to requests for comment.

In an interview published by Turin newspaper La Stampa earlier on Monday, Calenda said the two sides were working on a solution. “There are pre-requisites for reaching an agreement which will have to take into account both the French concerns on export of ‘know-how,’ and our concerns involving the need to have effective control to ensure the group works,” Calenda said.

Asked whether the Italian demand for 51 percent control of STX was untouchable, Calenda replied: “It is.” Calenda added that if a shipyard accord was reached, “we can start a discussion which leads rather swiftly to an equal accord between Fincantieri and Naval Group. We want a very significant European alliance, but with all the guarantees.”

French and Italian officials have long been pushing the idea of a broader “Airbus of the seas,” a project initially involving France — including state-owned military shipbuilder Naval Group — and Italy.

© 2017 Bloomberg L.P


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