Hitachi to Buy Italy's Finmeccanica's Rail Division for Y250 Billion - Source

By Eric Pfanner And Takashi Mochizuki 

TOKYO-- Hitachi Ltd., moving to expand its transportation business overseas, has agreed to buy the rail division of Finmeccanica S.p.A of Italy for Yen250 billion (about $2.1 billion), a person familiar with the situation said Tuesday.

The deal follows months of negotiations, during which Hitachi outlasted a rival bidder, Insigma Group of China.

After restructuring to scale back its consumer electronics business, the Japanese conglomerate has been pushing to expand abroad in areas ranging from train building to power generation equipment, in order to reduce its reliance on the slow-growing domestic market. The company moved the headquarters of its rail division to London from Tokyo last year after winning an order to supply high-speed trains in Britain.

Finmeccanica, an industrial and military contracting conglomerate that is controlled by the Italian government, has been trying to sell its train-making arm, AnsaldoBreda, as well as its stake in a rail signaling operating, Ansaldo STS, in order to reduce debt.

AnsaldoBreda makes high-speed trains for the Italian national railways, as well as rolling stock for the Milan Metro and other railway systems.

Write to Eric Pfanner at [e-mail] and Takashi Mochizuki at [e-mail]

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