Finmeccanica Won't Sell AnsaldoBreda Outright

MILAN--Finmeccanica SpA's (FNC.MI) new chief executive officer has decided against selling the group's AnsaldoBreda division outright, preferring to look for an industrial partner to help the maker of trams and trains compete better in the global market.

Alessandro Pansa revealed his decision at an event celebrating the delivery of a new high-speed train to state railway operator Ferrovie della Stato in the town of Pistoia earlier this week, according to a Finmeccanica spokesman Thursday, confirming local news reports.

Mr. Pansa would prefer to sell a minority stake to a partner and leave open the possibility of selling a further stake in the future to allow the partner to gain majority control.

AnsaldoBreda is one of three divisions that Finmeccanica had put up for sale in 2011 as it set about restructuring itself, a cumbersome conglomerate with activities ranging from helicopters to missiles.

AnsaldoBreda and the other two divisions--Ansaldo Energia and Ansaldo STS SpA (STS.MI)--were supposed to have been sold off by the end of 2012 to raise up to EUR1 billion to pay off debt.

Despite reported interest from Japan's Hitachi Ltd. (6501.TO), AnsaldoBreda remains part of Finmeccanica--as do the other divisions.

The only asset that Finmeccanica managed to sell was a minority stake in aerospace company Avio SpA to General Electric Co (GE) in early December.

Finmeccanica was later convulsed by the February arrest of its chief executive officer, Giuseppe Orsi, as part of an investigation into allegations of the use of bribes to secure a helicopter contract in India. Mr. Orsi has denied any wrongdoing.

Finmeccanica quickly replaced him with Mr. Pansa, who has taken pains to assure markets that the restructuring would still go ahead, if at a somewhat slower pace when it came to selling assets.

"Although the news by itself may seem negative if read together with a complete and redesigned restructuring plan at Finmeccanica it could be a positive in the long term," Mediobanca analyst Massimo Vecchio wrote in a March 27 report. "That's because the strategy of selling assets, in our view, have always had zero chances (selling assets, some of which problematic, to foreigners was never a real option in our mind)."

AnsaldoBreda, which has been losing money for years, is the supplier of high-speed trains for a new service between Belgium and the Netherlands, among other projects.

Write to Gilles Castonguay at [e-mail]; Twitter: @GRCastonguay

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