UPDATE 5-Finmeccanica agrees sale of rail businesses to Hitachi for $2.2 bln
* Rail asset sales to cut Finmeccanica debt by 15 pct
* Expected to boost investor confidence in turnaround plan
* Finmeccanica bond prices rise sharply
* Deal strengthens Hitachi foothold in Europe (Adds Finmeccanica CEO's comments throughout)
By Danilo Masoni and Valentina Za
MILAN, Feb 24 (Reuters) - Italian aerospace and defence group Finmeccanica has agreed to sell its rail business to Hitachi Ltd in a deal which will cost the Japanese conglomerate up to 1.9 billion euros ($2.2 billion) and cut Finmeccanica's debt by 15 percent.
For Hitachi the acquisition will strengthen its position in Europe, where it competes with the world's top three international train makers - Canada's Bombardier, Germany's Siemens and France's Alstom. The Japanese group had already moved its global rail division to London last year.
State-controlled Finmeccanica has been trying to sell loss-making train unit AnsaldoBreda and its controlling stake in rail-signalling company Ansaldo STS for almost four years, deeming the business to be too small to compete on its own in foreign markets.
However, corruption scandals and political meddling delayed the process, prompting ratings agencies to downgrade the Italian group's 4.1 billion euros of debt to junk status, increasing its financing costs and damaging its international competitiveness. Continued...