It has seen a strong rise in orders, including a subway deal in Peru. The company employs about 3,000 people, partly based in the unemployment-plagued cities of Naples and Reggio Calabria.
But a Hong Kong-based banker said there was still a pressing need for a “long-term plan” to get AnsaldoBreda back on track. He said that while a recapitalization would reduce the purchase price, it would not resolve some of the underlying issues such as the train maker’s pension liabilities.
CONSOLIDATION REVIVAL
A sale of Ansaldo would mark a revival of industry consolidation after an attempt to merge Siemens and Alstom’s train-making units failed this year.
The last major deal in the sector was Siemens’ 2.2 billion-euro acquisition of Invensys’ signaling arm, which received the green light from antitrust authorities in 2013.
In the face of fierce competition from Asian rivals, European champions see limited scope to increase their size in the global rail market without joining larger conglomerates.
China CNR, one of the bidders for Ansaldo, is the world’s largest train maker by sales ahead of China South Locomotive and Rolling Stock Corp Ltd and Bombardier Transportation.
Like Bombardier, CNR already has ties with AnsaldoBreda. The two companies signed a 10-year deal in 2012 for the provision of up to 600 of AnsaldoBreda’s Sirio low-floor trams. But CNR’s takeover ambitions could be challenged by the need for Chinese government approval, the Hong Kong-based banker said.
The sources close to the Finmeccanica sale said France’s Thales was mainly looking to buy Ansaldo STS and had little appetite to turn AnsaldoBreda around because of the limited overlap between the two companies.
Spain’s CAF, has a market capitalization of 1 billion euros and would struggle to finance a bid without teaming up with a partner, several Madrid-based bankers said.
In the first-half of the year, Finmeccanica’s rail businesses posted core earnings (EBITA) of 26 million euros, beating forecasts mainly thanks to smaller losses at AnsaldoBreda. Revenues rose 6.7 percent to 1 billion euros.[eap_ad_3]