France, Italy announce shipyard deal

The leaders of France and Italy announced a deal Wednesday that allows Italian shipbuilder Fincantieri to take control of France's STX shipyard, ending a weeks-long dispute between the two European nations. 

French President Emmanuel Macron, speaking alongside Italian Premier Paolo Gentiloni in the French city of Lyon, called the agreement creating a European naval industry behemoth a "win-win deal." The agreement appears to mark the end to a sometimes bitter row over the ownership of the shipyards.

France angered Italy in July by ordering a "temporary" nationalization of STX, cancelling a deal in which Fincantieri and another Italian investor had agreed to buy 55 percent of the firm, based in Saint-Nazaire in western France.

Creating European champions?

On the back of Wednesday's deal, which will see Fincantieri effectively holding a 51 percent stake in STX France, Paris and Rome will explore the creation of a Franco-Italian naval defense group, merging French military shipyards company Naval Group with Fincantieri, Macron's office said.

The two countries hope outlines of that deal can be struck by June 2018, creating a pan-European naval defense champion akin to the combined rail engineering group created on Tuesday via the near 50/50 tie-up between the rail businesses of France's Alstom and Germany's Siemens.

France sees the creation of European champions as crucial to warding off the threat posed by industrial powers in China and the United States. The STX deal comes a day after Macron offered an ambitious vision for European renewal, calling on the continent to forge deeper cooperation.

While Macron, who took office barely five months ago, initially appeared determined to protect French strategic assets at all costs, the deals between Alstom and Siemens, and now Fincantieri and STX, suggest he is willing to see French control diluted if it opens the way for a bigger European champion.

Special rights

Under the terms of Wednesday's agreement, Fincantieri will take a 50 percent stake in STX. The French state will hold 34.34 percent, Naval Group 10 percent, STX staff 2 percent and STX local suppliers 3.66 percent. In order for Fincantieri to take effective control, the French state will lend it a one percent stake. Paris will have the right to demand the holding back if Fincantieri does not honor commitments on jobs, governance or intellectual property.

Fincantieri has committed to maintaining the shipyard's research and development division in France; to not transferring know-how or intellectual property outside Europe; to granting France a right of veto over the future name of the STX company; and to giving the

French special rights related to the military activity of STX.

STX is the only shipyard in France where it is possible to build a possible second aircraft carrier and large warships. Last year, it turned out the world's largest cruise ship, the Harmony of the Seas, and earlier created the Queen Mary II.

France will pay particular attention to Fincantieri's compliance with the rules of governance, the level of investment, the preservation of jobs on French soil, the activity of the local French subcontractors and the fair treatment between France and Italy, depending on the development of the future group, the French presidency said.

The two countries on Wednesday also recommitted themselves to an ambitious rail link under the Alps, with both Macron and Gentiloni stressing its "strategic importance." The core of the 270-kilometer (167 mile) high-speed line, linking France's third-largest city and Italy's fourth, is a 57-kilometer tunnel under the Alps.

In July, the French government signaled its intention to pause the project, whose cost is estimated at more than €25 billion ($29.37 billion), pending a review of France's overall infrastructure plans.

sri/kd (Reuters, AP, dpa)