Italian aerospace and defense conglomerate Leonardo postponed the initial public offering of US electronics company DRS because of “unfavorable” market conditions, causing their shares in Milan to drop more than 6%. .
“Despite investor interest in the price range during the roadshow, unfavorable market conditions Leonardo said in a statement Wednesday.
Shares of Leonardo fell 6.34% to € 6.86 in European late morning trading on Wednesday.
The Arlington, Va. DRS, which considers the US military a customer, was listed on the New York Stock Exchange this week. Leonardo plans to sell nearly 32 million DRS shares at a suggested price of $ 20 to $ 22 per share.
Rome-based Leonardo is expected to receive all proceeds from the offering, while DRS intends to keep future profits for growth.
The US Department of Defense accounts for more than 80% of DRS’s revenue, reaching $ 2.8 billion last year, with an operating profit of $ 181 million.
One potential reason behind the IPO delay is the US military spending plan. A source told Reuters that the Biden administration could cut military spending to focus on stimulus.
Leonardo said the IPO will likely be reconsidered when market conditions are more favorable and will allow for a proper valuation for the business.