NEW YORK, Feb 24 (Reuters) - Italian defence and aerospace group Leonardo plans to list up to 30% of its defence electronics division DRS in New York later this year, three sources close to the matter said.
The Rome-based group has picked Goldman Sachs, JPMorgan, Bank of America Merrill Lynch, Citigroup and Morgan Stanley as bookrunners for the transaction, the sources said.
One source said the Italian group planned to list 25-30% of the DRS business, while the other two sources pointed to a stake of 20-25%.
Another source said a stake sale to a private investor like private equity was also possible if an initial public offering failed to meet price expectations.
Leonardo, Citigroup, Bank of America Merrill Lynch and Goldman Sachs declined to comment. The other banks were not immediately available for comment.
The share sale will bring new financial resources for the Italian defence company, which recorded an increase in its debt in the first nine months of last year to 5.88 billion euros($7.14 billion) from 4.3 billion euros in the same period of 2019.
A roadshow with investors could start in mid-March, one of the sources said, adding that DRS could be valued at 11-12 times its expected core earnings in the IPO.
DRS is expected to have core earnings of just over $200 million this year, one defence industry analyst estimated.
DRS competes with defence electronics companies like BAE Systems, Elbit and Hensoldt, which trade at about 7-12 times their expected core earnings.
State-controlled Leonardo bought the U.S. defence company in 2008 in a deal that valued it at $5.2 billion, including $1.27 billion in debt.
In 2019 DRS, based in New Jersey, reported revenue of $2.7 billion, up 17% year-on-year, and core earnings of $208 million, up 38%. ($1 = 0.8235 euros) (Reporting by Mike Stone and Francesca Landini; Additional reporting by Arno Schutze, Elisa Anzolin and Stephen Jewkes; Writing by Francesca Landini; Editing by Jan Harvey, Jane Merriman and Sonya Hepinstall)
