Leonardo defense acquisitions may continue as Europe boosts military spending
Leonardo CEO Lorenzo Mariani told CNBC the defense group will keep looking at deals after raising its 2026 outlook.
By Dev Ramirez · Crypto Correspondent
· 3 min read
Leonardo defense acquisitions are likely to remain part of the Italian group’s growth plan as Europe spends more on military equipment. For investors, the point is straightforward: higher defense budgets are feeding order books, but companies still have to prove they can build and deliver fast enough.
CEO Lorenzo Mariani told CNBC in Rome that Leonardo will keep pursuing acquisitions and strategic partnerships to support longer-term growth. He said the company must close the gap between rising customer demand and its ability to meet that demand across both its European operations and U.S. business.
European defense contractors are racing to add capacity after Russia’s full-scale invasion of Ukraine and higher NATO spending targets lifted demand for weapons, vehicles, sensors and software. Mariani told CNBC that speeding up internal processes is now a central task for Leonardo.
Why is Leonardo buying defense companies?
Defense companies use acquisitions to add technology, secure suppliers and expand production more quickly than they could through hiring and factory investment alone. In Leonardo’s case, recent deals have pushed the group deeper into land systems, cybersecurity and software used in AI-enabled military missions.
Leonardo completed its 1.6 billion euro, or $1.8 billion, purchase of Iveco Defence Vehicles in March. This week, its U.S. subsidiary Leonardo DRS agreed to buy software company Raft for $450 million, saying the deal would expand its artificial intelligence, data fusion and mission software capabilities.
The group also agreed earlier this year to acquire Becrypt, a British cybersecurity company. Mariani told CNBC that M&A remains an area of opportunity, including activity in recent days.
Leonardo is not the only European defense name using deals to strengthen its position. Italian shipbuilder Fincantieri recently announced stakes in four underwater technology companies, with CEO Pierroberto Folgiero describing the move to CNBC as the company’s second wave of M&A. German defense electronics company Hensoldt bought Dutch optronics specialist Nedinsco this year to strengthen supply chains and increase production capacity.
What changed in Leonardo's outlook?
Leonardo raised its full-year targets after reporting stronger first-half demand. The partly Italian state-owned company said new orders rose 45% in the first six months of the year.
Its order backlog, meaning contracted work that has not yet been delivered or recognized as revenue, climbed 30% from a year earlier to 59 billion euros by the quarter ended in June. Leonardo said it now expects 2026 new orders of 28.2 billion euros, up from a prior forecast of 25 billion euros.
The company also lifted its forecast for earnings before interest, tax and amortization to 2.21 billion euros from 2.03 billion euros. That measure is a version of operating profit that strips out financing costs, taxes and amortization, and companies often use it to show the performance of the core business.
Mariani told CNBC that Leonardo is well placed to benefit from higher European defense spending because it sells across multiple defense areas and has a differentiated offering.
Defense stocks have cooled after several strong years following Russia’s invasion of Ukraine. CNBC reported that some investors are questioning whether valuations have moved ahead of the industry’s ability to expand output. Leonardo shares are up about 11% this year, roughly matching the gain in the pan-European Stoxx 600 index.
Leonardo is also putting more emphasis on newer defense technologies, including unmanned systems and AI-powered weapons, as conflicts in Ukraine and Iran show how military priorities are changing, according to CNBC.
This story draws on original reporting from CNBC.
