MILAN (Reuters) - Italy is considering blocking the proposed sale of Piaggio Aerospace’s executive-jet business to a Chinese state-backed consortium, amid concerns over the transfer of sensitive technology and potential loss of jobs, a source familiar with the matter said.
Last week Reuters reported that the owner of Piaggio Aerospace, Abu Dhabi sovereign wealth fund Mubadala, planned to sell the executive jet division to a Chinese state-backed consortium, and that the deal was being scrutinized by Rome.
The business produces the P180 turbojet which shares design and technology features with surveillance drones made by Piaggio Aerospace’s defense and security arm.
“I don’t know if the sale will be allowed. There are some concerns about the sale of the P180 to the Chinese, because their offer is backed by government entities and we see the risk of a know-how transfer to China,” the source said, asking not to be identified because of the sensitivity of the matter.
“The P180 technology has several overlaps between the civil and military sectors,” the source said.
The source did not disclose the identity of the Chinese buyers, nor the value of the proposed deal. Piaggio Aerospace and Mubadala declined to comment.
A second source said Mubadala had heard that the Italian government was concerned about the planned sale but had received no formal notification. Talks with the Chinese buyers were still ongoing, this source said.
The Rome government is also worried that Mubadala’s planned break-up of Piaggio Aerospace would leave the company in a weaker position and make it more vulnerable to competition, according to the first source. Mubadala is also seeking to sell the firm’s engine and maintenance businesses.
“The risk is to be left with an emptied company and with a jobs problem, as we doubt that the military business would be viable on its own,” the source said, adding the government was likely to take a decision “in a matter of weeks”.
Rome can veto asset sales and takeovers in the strategic defense sector, even if the asset being sold is not a defense business but uses dual-use technology.
A new meeting of a government committee that reviews changes of ownerships in strategic sectors is scheduled for Thursday.
The planned sale of Piaggio Aerospace’s executive-jet business comes at a sensitive time for Chinese investments in the European Union, with the head of the European Commission recently proposing to limit state-backed foreign takeovers in hi-tech manufacturing, among other industries.
additional reporting by Stanley Carvalho in Abu Dhabi; Editing by Elaine Hardcastle