Italy will set conditions for Piaggio Aerospace's asset sales

ROME (Reuters) - The Italian government said it would use its so-called “golden power”, which allows it to veto or set conditions on asset sales deemed of strategic national importance, over the planned sale of Piaggio Aerospace’s executive jet business.

In a statement after a cabinet meeting on Thursday, the government said it would impose conditions over the sale of the business to a foreign company it named as PAC Investment SA “given the relevance of the transaction for national defense and security interests.”

The statement did not detail those conditions, but said the government would check that they would be respected. Piaggio Aerospace had no immediate comment.

A source familiar with the matter told Reuters earlier this month that Italy was considering blocking the 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.

The business produces the P180 turbojet which shares design and technology features with surveillance drones made by Piaggio Aerospace’s defense and security arm.

Piaggio Aerospace is owned by Abu Dhabi sovereign wealth fund Mubadala, which is also seeking to sell the firm’s engine and maintenance businesses.

The source familiar with the matter had told Reuters that 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.

Rome can veto or set conditions for 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.

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.

Reporting By Gavin Jones and Silvia Aloisi; Editing by Elaine Hardcastle