Allen & Overy's (A&O's) Italian practice has scooped a lead role advising debt-laden automotive giant Fiat on the high-profile e1.5bn (£1.05bn) disposal of its aerospace arm, Avio.

A&O fielded some of its most senior Italian lawyers on the deal, with partners Guido Brosio, Roberto Casati and Fabio Alberto Regoli advising Fiat on the sale of Avio to investment group Carlyle and state-run defence company Finmeccanica. Carlyle was advised by Pedersoli Lombardi & Associati, fielding a team under name partner Carlo Pedersoli, while Finmeccanica was advised by Francesco Gianni, name partner of Linklaters' ally Gianni Origoni Grippo & Partners.

The disposal of the profitable aerospace arm, which manufactures components for the European Space Agency's Ariane launcher vehicle, is regarded as part of a bid to bolster Fiat's car manufacturing interests.

The sale agreement signed on 1 July is part of a wider sell-off of Fiat's assets following mounting speculation last year that the Italian conglomerate might be pushed to sell out to US ally General Motors.

Although this is not the first major deal A&O has done for Fiat, it underlines the London-based firm's strong presence in Italy.

In 1998 A&O became one of the few London firms to secure a merger with a heavyweight Italian practice when it merged with Brosio Casati e Associati.

"We are delighted to have been involved in this prestigious transaction," Brosio told Legal Week. "We are not aware of other disposals but if there were we would be honoured to volunteer our services."

Fiat's traditional Italian adviser is Grande Stevens, although it has also used other foreign firms for its recent disposals, calling in London's Norton Rose for last year's sell-off of its Teksid division to US investors Questor Management.

Brosio would not comment on why the firm had been asked to handle the Avio disposal, but added: "No one can be expected to do too many jobs at one time."

A&O now has 27 partners in Italy among a total of 200 lawyers spread between branches in Milan, Rome and Turin.