Genoa - General Electric is accelerating purchase negotiations with Finmeccanica for the acquisition of Ansaldo STS and – surprisingly – Breda too. For the first time, the American firm has accepted the condition set out by the CEO Alessandro Pansa who has always insisted that both companies should be sold together. There seems to be no written offer yet, however General Electric confirmed its willingness to negotiate the purchase of the whole business, which is the jewel of STS railroads plus the Breda trains, the financially-critical side of Finmeccanica. Pansa has recently committed with the unions to keep all sites open, including the most problematic of all; Carini, near Palermo.
The news have not been confirmed nor denied at Piazza Montegrappa. There are still rumors that Hitachi Rail and Mitsubishi are in the race, but sources close to the deal insist that GE has a clear advantage. The news circulated around the business and political circles all day yesterday and it was well received at Piazza Affari, where the Finmeccanica share price went up by 2.59% to 6.525 Euro, while Ansaldo STS went up by 0.24% to reach 8.285 Euro. In Italy, General Electric is healthy and it has developed an excellent rapport with the government. The success story of Nuovo Pignone and the recent acquisition of Avio proves it and suggests that the multinational company may hit the target again. So, the possible buyer has good credentials. However, local institutions and politicians are still convinced that it would be better if the government moved forward with the Ansaldo Italia project alongside the Ansaldo Energia project by using funds from the FSI Savings and Loans Association to finance this second acquisition. The difficulty lies in the fact that the Strategic fund, which controls 84.5% of Ansaldo Energia, cannot handle a loss-making operation like Breda. On the other hand, a potential offer of GE on the STS+Breda package many not easily be hindered by the government. Having clarified this, it should not be ruled out that Pansa may apply the same tactic he used for the Ansaldo Energia operation, when the negotiations with Doosan moved forward until an offer was made and then the government was cornered, since there was an offer on the table and the politicians needed to decide whether to lose Energia or give in.
In the case of Ansaldo Energia, the government decided to intervene and it may happen again. At this moment, the only certainty is the increasing interest of General Electric on the STS+Breda joint operation. Finmeccanica continues its efforts to focus on the aerospace and defense industries, as announced by the CEO and confirmed by the Italian Parliament last week. In the meantime, the unions insist that the Treasury should force the group to surrender the railroad company to the Savings and Loans Association instead of selling out to foreign companies. With the sale of 39.5% of Ansaldo Energia, Finmeccanica made 277 million, and an additional 17 million will be cashed in 2017 when an additional 15% will be sold. So, the negotiations of STS and Breda have taken a new upsurge and a sales agreement with General Electric may be in sight, or maybe it will be with CDP if the same scheme played 6 months ago is to be repeated.