Chinese duo steps in race for Finmeccanica rail assets - sources

By Danilo Masoni

MILAN (Reuters) - Technology firm Insigma has teamed up with another Chinese company to try to buy Finmeccanica's rail assets, two people familiar with the matter said, a move that could thwart a rival bid from Hitachi.

State-controlled Finmeccanica is selling its unprofitable train-making unit AnsaldoBreda and its 40 percent stake in Ansaldo STS, which makes rail signalling systems, to cut debt and focus on its core aerospace and defence businesses.

The sources told Reuters that Insigma had agreed with Chengdu-based construction equipment maker Xinzhu on a possible bid, asking Finmeccanica for a few more weeks to review AnsaldoBreda's accounts before presenting a proposal.

Finmeccanica CEO Mauro Moretti had given potential bidders a Nov. 17 deadline to submit bids but by that date the group had received only one proposal, from Hitachi.

Japanese news agency Nikkei said this month that Hitachi was likely to offer around $1.7 billion for the assets.

The late Chinese move has now presented the CEO with a dilemma: whether to go ahead with Hitachi on an exclusive talks basis or allow another extension of the long-delayed sale. "The ball is in Finmeccanica's court," one source said.   

Finmeccanica declined to comment. Representatives at United Mechanical and Electrical, the Insigma unit involved in the transaction, and Xinzhu could not be reached for comment.

A sale of AnsaldoBreda and listed Ansaldo STS, which has a 1.7 billion-euro market cap, would mark a revival of industry deals in Europe after a failed attempt this year to merge Siemens and Alstom's train-making units.

News of a possible bid by the Chinese duo for the Finmeccanica units was earlier reported by Italian newspaper Corriere della Sera this week.

Moretti, who took over the top post at the group this June after running Italy's state railways for six years, confirmed this month plans to decide on the sale by the end of the year.

In mid-October Finmeccanica said it had shortlisted Hitachi and China's CNR Corp in the sales process. But CNR, which had teamed up with Insigma for a bid, later pulled out of the contest to focus on a merger with CSR Corp, one of the sources said.

(Additional reporting by Antonella Cinelli in Rome and by Shanghai Newsroom; editing by Keith Weir)