TOKYO -- Hitachi has landed a deal to buy the railway business
of Italy's Finmeccanica for a sum seen exceeding 250 billion yen
($2.08 billion), the Nikkei reported Tuesday, citing to a source
familiar with the matter.
This will mark Hitachi's biggest acquisition ever, eclipsing its
2003 purchase of IBM's hard-disk-drive business for 240 billion
yen.
The Italian defense and aviation company announced last summer
plans to unload wholly owned rail car subsidiary AnsaldoBreda and
Ansaldo STS, a traffic signal company in which it holds a roughly
40% stake.
Four companies, including Thales of France, stepped forward as
prospective buyers. Hitachi came close to sealing the deal last
November, but a subsequent offer from a Chinese company delayed
Finmeccanica's final decision.
Hitachi plans to first acquire all shares held by Finmeccanica
in the two companies and then make a tender offer to turn the Milan
Stock Exchange-listed Ansaldo STS into a wholly owned subsidiary as
well.
With Ansaldo STs' market capitalization roughly equivalent to
240 billion yen, the deal is expected to cost Hitachi more than 250
billion yen.
The acquisition will push up the Japanese company's annual sales
from rail-related businesses to more than 400 billion yen -- half
as much as Bombardier of Canada, Siemens of Germany, or Alstom of
France.
Hitachi's rail operations, which have focused on Japan and the
U.K., will now go global and gain Italian rail car production
facilities.
Ansaldo STS enjoys high profitability and is the second-largest
player in traffic signal systems. It boasts solid track records in
the U.S. and Europe.
With rail car giants China CNR and CSR on course to merge this
year, giving rise to an industry behemoth, more consolidation will
likely follow the Hitachi-Finmeccanica deal.