Exclusive: Bombardier, Hitachi lead bids for Finmeccanica's rail units - sources

Fri Aug 15, 2014 11:40am EDT
 
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By Sophie Sassard, Pamela Barbaglia and Danilo Masoni

LONDON/MILAN (Reuters) - Canadian plane and train maker Bombardier and Japanese industrial giant Hitachi are the two frontrunners to buy Finmeccanica's rail subsidiaries, several sources close to the auction process said.

Italy's Finmeccanica has been trying to sell its cash-strapped train division AnsaldoBreda together with its profitable rail signals business Ansaldo STS for three years, to help reduce net debts of 4.8 billion euros ($6.4 billion).

The sources said Bombardier Inc and Hitachi Ltd are expected to bid for the Italian group's rail businesses ahead of an August 29 deadline. Three other groups are also expected to bid.

They are French defense electronics firm Thales, Spanish train builder Construcciones y Auxiliar de Ferrocarriles and train maker China CNR Corp Ltd, in tandem with its partner Insigma Technology Co Ltd.

Finmeccanica has struggled to sell its rail businesses together because the division that makes trains, AnsaldoBreda, has been losing money for years and has long been a drag on the Italian defense group's results.

Finmeccanica's listed signaling business, Ansaldo STS, is considered an attractive prospect for the bidders and has a market value of $1.45 billion.

The sources close to the auction process, who declined to be named because the talks are private, said Bombardier and Hitachi had the most overlap with train builder AnsaldoBreda.

Several sources said Bombardier Transportation was well-placed to win because it already works with AnsaldoBreda in the development, production and sale of the new Frecciarossa 1000, a train capable of transporting passengers at 360 km per hour.   Continued...

 
Employees and guests tour a Bombardier LRV train at the manufacturing facilities in Toronto May 29, 2012.  REUTERS/ Mike Cassese