Bloomberg News

Finmeccanica Beats Korean Offer to Supply Aircraft to Israel

February 21, 2012

(Updates with shares in fifth paragraph.)

Feb. 16 (Bloomberg) -- Finmeccanica SpA won an order valued at an estimated $1 billion from the Israeli air force for combat training jets, beating an offer from South Korea.

Israel plans to buy 30 M346 aircraft from the Alenia Aermacchi unit of Rome-based Finmeccanica, the Ministry of Defense said today in an e-mailed statement. In return, the Italian government agreed to make purchases from Israeli defense industries for a matching $1 billion.

Finmeccanica was selected over Korea Aerospace Industries Co. in part because of the so-called offset deal, the government said. The air force also “expressed professional preference for the Italian training jets.” The deal must be approved by the defense minister and the Knesset, Israel’s parliament.

Korea Aerospace, the country’s largest planemaker, was offering its T-50 Golden Eagle jet. The manufacturer signed its first export deal for the aircraft in May, selling 16 planes to Indonesia. In that deal, South Korea agreed to transfer technology to Indonesia.

Finmeccanica rose 2.4 percent, the sharpest gain in two weeks, to close at 3.49 euros in Milan trading, outperforming Italy’s benchmark FTSEMIB index, which declined 0.9 percent.

Finmeccanica, which is controlled by the Italian state, has been increasing sales in fast-growing markets to rely less on the defense budgets of its main buyers, Italy and the U.K. The Italian company is a partner in the Eurofighter Typhoon warplane and has a turboprop venture with European Aeronautic, Defense & Space Co.

Italian Defense Minister Giampaolo Di Paola said yesterday that the country will reduce its planned order for Lockheed Martin Corp.’s F-35 fighter jets, built in partnership with suppliers including Alenia. The Finmeccanica unit got a 170 million-euro ($223 million) contract in June from Singapore for services related to M346 jets.

--With assistance from Andrew Davis in Rome. Editors: David Risser, Tom Lavell

To contact the reporters on this story: Marco Bertacche in Milan at mbertacche@bloomberg.net; Calev Ben-David in Jerusalem at cbendavid@bloomberg.net

To contact the editors responsible for this story: Gwen Ackerman at gackerman@bloomberg.net; Jerrold Colten at jcolten@bloomberg.net


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