Hitachi agrees to buy Italian railway firms in global push
Japanese media earlier reported the deal expected to close later this year, could top $2.0 billion.
TOKYO (AFP) - Hitachi said Tuesday it would buy the rail and traffic signal businesses of Italy s Finmeccanica, in a deal that could reach more than $2.0 billion as it looks to take on global rail giants.
The Japanese industrial conglomerate said it would pay 773 million euros ($875 million) for the Italian firm s 40 percent stake in Ansaldo STS, the world s number two traffic signal company, and 36 million euros for struggling rail car unit AnsaldoBreda.
Hitachi said it would also bid for the remaining shares of Milan-listed Ansaldo STS that Finmeccanica does not already own.
Japanese media earlier reported that the deal, which is expected to close later this year, could top $2.0 billion.
But the acquisition faces opposition from Italian labour unions, who immediately urged the Italian government to block it "to save jobs and a strategic sector for the country."
The Fiom-Cgil union group demanded urgent talks with government ministers on the decision.
But with Prime Minister Matteo Renzi keen to encourage inward investment in a recession-bound economy, state interference with the deal is seen as unlikely.
Hitachi, which fell 0.77 percent to finish at 828.2 yen in Tokyo, is looking to boost its global operations after its key nuclear unit took a hit following the 2011 Fukushima nuclear crisis.
The acquisition will push up Hitachi s annual rail-related sales to more than 400 billion yen -- about half that of Canada s Bombardier, Siemens of Germany or France s Alstom, the leading Nikkei business daily reported earlier Tuesday.
Last week a consortium, including Hitachi and Japan s top heavy machinery maker Mitsubishi Heavy Industries, struck a $3.36 billion deal to build Qatar s first subway system.
"The acquisitions represent a key milestone in Hitachi Rail s strategy to become a global leader in total rail solutions," Hitachi and Finmeccanica said in a joint statement.
"The businesses acquired are strategically important for Italy and the combination with Hitachi will also provide a unique opportunity to pursue untapped growth potential in new markets."
Finmeccanica CEO Mauro Moretti said the sale of the rail transport business was a key step in the company s plan to focus on the core business of aerospace, defence and security.
Hitachi and three other companies stepped forward as prospective buyers after Finmeccanica announced plans last summer to unload the two subsidiaries.
The Japanese firm came close to sealing a deal last November, but a subsequent offer from a Chinese company delayed Finmeccanica s final decision.
The purchase is the latest step in Hitachi s long-running pursuit of the two companies, with Italian media reporting in March 2012 that the conglomerate was interested in buying the firms.
Genoa-based Ansaldo STS, which had sales of 1.3 billion euros last year, has about 4,000 employees in more than 30 countries.
Naples-headquarted AnsaldoBreda has about 2,300 employees and makes a range of trains including those for subways and high-speed routes. It is supplying a fleet of driverless trains for Milan s metro.
In March 2014 Finmeccanica announced its intention to sell AnsaldoBreda, saying the operating loss of the group had hit 227 million euros in 2013 against 160 million euros in the previous year.
