Handelsblatt reported that Pierroberto Folgiero, the Chief Executive of Fincantieri, recently proposed a tie-up between Thyssenkrupp’s Defense Division, which is up for sale. Fincantieri was considered a possible partner by Thyssenkrupp for many years, as it sought to sell the Marine Systems division (TKMS), which produces frigates and subs. Folgiero, last year, emphasized the benefits of a combined effort.

Thyssenkrupp is trying to sell the division. It has held talks with Carlyle, a private equity firm, and KfW, a German state lender about selling stakes.

Thyssenkrupp didn't comment on the report. It only confirmed that it was evaluating a sale of TKMS stakes to Carlyle and the German government. A spin-off is also being considered.

Fincantieri's spokesperson declined to comment

The German government did not respond immediately to requests for comment. (Reporting and editing by Topra Chopra; Gianluca Smeraro, Christoph Steitz).