By Giulia Segreti and Alvise Armellini
ROME (Reuters) - Italy's Leonardo is trimming its stake in U.S. unit DRS as new CEO Roberto Cingolani looks to expand the state-controlled group with major roles in European defence projects.
Leonardo late on Wednesday said it would launch a public secondary offering of 16.5 million shares, or a 6.3% minority stake in DRS, worth about $344 million, according to Reuters calculations, reducing its holding to just below 74%.
The proceeds would increase the defence contractor's flexibility to finance accretive investments and acquisitions, it added in a statement.
Cingolani in an analyst call after third-quarter results last week said the company would sell assets in a "moderate way" to raise funds for new joint ventures and European projects.
Two sources at Leonardo confirmed that the DRS deal was part of that strategy.
Cingolani, a former government minister who became CEO in May, has embraced the need to create broader European alliances to take advantage of rising defence budgets.
"The competitors are in the U.S., the competitors are in the East. We cannot have domestic markets and domestic competition within Europe. We have to create giants," Cingolani said.
European authorities have long called for greater defence cooperation between states, with increased spending, to create coherent forces capable of responding to any crisis.
Leonardo is looking to boost its involvement in the next-generation fighter jet Global Combat Air Programme(GCAP) between Italy, Britain and Japan, and join the German-led Leopard 2 tank programme.
It has pointed to its cross-border MBDA European missile company joint venture with Airbus and BAE Systems (LON:BAES) as a model for the projects.
"Cingolani recently confirmed that the group was evaluating potential disposals... to finance new investments... aiming to strengthen the company's global market positioning," Intesa Sanpaolo (OTC:ISNPY) wrote in daily research report to clients.
Leonardo's Milan-listed shares were up 1.7% at 1404 GMT, having risen more than 80% since the beginning of the year.
Some analysts expressed surprise that the company was reducing its stake in DRS, acquired 15 years ago in a $5.2 billion deal when the Italian group was known as Finmeccanica.
"(The move) further dilutes Leonardo's hard-won U.S. exposure," said Nick Cunningham from equity research firm Agency Partners, adding that unusually for a non-UK foreign contractor, they had "not done that much" to leverage their U.S. defence presence.
"So maybe they regard it as a source of funds or are even undertaking a staged disposal," he said.