Reuters: Mergers News: UPDATE 2-Hitachi approaches Finmeccanica over rail business

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UPDATE 2-Hitachi approaches Finmeccanica over rail business Mar 27th 2012, 14:17 Tue Mar 27, 2012 10:17am EDT * Japan's Hitachi interested in stakes in rail units-trade union * Talks with Hitachi intensified in recent months-source * Finmeccanica expected to post 2.3 bln euro loss on Tuesday * Finmeccanica shares up more than 10 percent By Danilo Masoni and Paolo Biondi MILAN/ROME, March 27 (Reuters) - Japanese group Hitachi has approached Finmeccanica about buying some rail businesses the Italian defence firm wants to sell, a union official said on Tuesday, raising hopes the seller's turnaround plan could gain traction. Loss-making train-maker AnsaldoBreda, rail signalling-systems group Ansaldo STS, and power engineering firm AnsaldoEnergia, were singled out as non-strategic units by Finmeccanica in November. "Hitachi is interested (in AnsaldoBreda and Ansaldo STS). Any marriage would need time. I don't think it's around the corner," Giovanni Contento, national secretary at Italian union UILM, told Reuters. A source close to the talks told Reuters discussions with Hitachi over a stake sale in AnsaldoBreda had intensified in recent months after interest from General Electric of the U.S. cooled down. Ansaldo STS, which alone has a market capitalisation of about 1 billion euros, is the most attractive of the transportation assets earmarked for sale. Finmeccanica is expected to unveil later on Tuesday a 2011 net loss of 2.3 billion euro ($3.06 billion), two senior company sources told Reuters earlier in March, as the state-controlled group cleans up its accounts under a new management. Finmeccanica, Italy's second biggest industrial employer with some 75,000 staff, underwent a management shake-up in December in the wake of an ongoing corruption probe in Italy that forced out previous boss Pier Francesco Guarguaglini. The appointment of insider Giuseppe Orsi, who took over Guarguaglini's powers as chairman, was a test for Italy's new government of Mario Monti and reflects in part a change in tone compared to the previous government of Silvio Berlusconi. Orsi, an aeronautical engineer who started his career 39 years ago in a company now part of the conglomerate, announced last year plans to sell 1 billion euros of assets by end-2012. He is pressing ahead with rebuilding the group's reputation and turning its business round by focusing on core defence and aerospace operations. FOREIGN INTEREST The source close to the talks said several foreign groups, including Hitachi, had expressed interest for Finmeccanica's Ansaldo STS. The source mentioned Bombardier Inc, Alstom SA, Siemens AG and Mitsubishi. These companies were not immediately available for comment. Finmeccanica declined to comment. Earlier on Tuesday, Italian newspaper Il Sole 24 Ore said in an unsourced report Hitachi could be close to buy a 50 percent stake in AnsaldoBreda and 29 percent of Ansaldo STS. An Hitachi spokesman in Tokyo said the company's policy was not to comment on rumours. Contento, the union leader, said a U.S. or a Japanese partner could make a better fit for AnsaldoBreda because he expected partnership with larger European rivals such as Alstom or Siemens to lead to job losses. By 1148 GMT, Finmeccanica was up 10.2 percent at 3.83 euros, an 8-day high. "The market is betting on an announcement coming out of today's board meeting. The press report makes Finmeccanica's 1 billion euro sales plan more credible," said an Italy-based analyst, who declined to be named. "On Breda we believe that any potential bidder won't enter into final talks before a detailed restructuring plan is agreed with the unions," Mediobanca said in a research note. Link this Share this Digg this Email Reprints

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