France and Italy Agree to End Proposed Fincantieri-Chantiers Merger
Citing the impact of COVID-19 and the current economic situation, France and Italy announced jointly that they have agreed not to proceed with the merger of two of Europe’s largest shipbuilders, Chantiers de l’Atlantique and Fincantieri. First proposed in February 2018, the completion of the merger of the two state-owned shipbuilding companies had been delayed pending an anti-trust review and approval from the European Commission.
A joint statement issued by France’s Minister of the Economy and Finances and Italy’s Minister of Economic Development said that following a telephone conversation with Margrethe Vestager, Executive Vice President of the European Commission, France, and Italy had determined “that the current economic context does not allow the continuation of the planned merger.” They announced that the agreement for the transfer of Chantiers de l'Atlantique, signed by the French State, and Fincantieri on February 2, 2018, will end on January 31, 2021, after being extended five times.
“In order to allow the two companies to focus on their exit strategy from the crisis and on new projects, France and Italy have drawn conclusions from the lack of decision of the European Commission and the economic and health context,” according to the written statement issued by both governments.
The agreement to merge the operation of the two shipyards had come about after France took control of the then STX France operation after the collapse of the South Korean company. A shipyard with a long history building both passenger ships as well as naval vessels, France considered the yard, which reverted to its original name, as a strategic asset for the country and a major employer. The French yard had in recent years expanded its business as a builder of the world’s largest cruise ships competing with Fincantieri in Italy and Meyer Werft with its operations in Germany and Finland.
France and Italy had also built cooperation on several naval projects being carried out jointly by the two companies. Speaking about the merits of the cooperation in 2018, Fincantieri CEO Guiseppe Bono described the agreements as the creation of what he has dubbed an "Airbus of the Seas." The two state-owned companies Bono said were top vendors in the defense sector, and by combining their capabilities would be better able to counter competition from China and other competitors on the international market.
The merger of Chantiers and Fincantieri had, however, faced an uphill battle after the European Commission expressed doubts about the impact of the transaction in terms of competition. At the end of October 2019, the European Commission announced it had decided to open an in-depth investigation into the proposed merger citing specific concerns about competition for the construction of cruise ships.
Due to expire at the end of 2020 after the previous extensions, the French government had agreed to a one month extension until January 31, 2021. At the time, the Italian and French governments said they planned to write to the EU Competition and Industry Commission urging them to finalize the inquiry into the deal.
In announcing the decision not to extend the agreement past the end of this week, both countries reaffirm the strength of their ties in terms of economic cooperation, particularly in the industrial sector. French also said that it would continue to support Chantiers de l'Atlantique as its main shareholder for as long as the current crisis will last.