By Danilo Masoni
MILAN Oct 4 (Reuters) - Finmeccanica said it had agreed to sell power unit Ansaldo Energia to an Italian state-backed fund, a deal that will help the company cut debt and focus on its core aerospace, defence and security businesses.
Finmeccanica, one of Italy's largest employers, put the gas turbine maker and other assets up for sale two years ago but political meddling slowed the process, prompting downgrades to junk of its 5 billion euro ($6.80 billion) debt pile.
The operation agreed on Friday envisages state-backed lender Cassa Depositi e Prestiti, through its Fondo Strategico Italiano fund, buying 85 percent of Ansaldo Energia in 2013 and the rest via a put and call option in 2017, for 777 million euros.
Under the deal, Finmeccanica will initially retain 15 percent of Ansaldo Energia and cash in 273 million euros, while U.S. fund First Reserve will sell its entire 45 percent holding to FSI.
The transaction also includes an earn-out worth up to 130 million euros, linked to economic results already laid out in Ansaldo Energia's business plan.
South Korea's Doosan Heavy Industries and German group Siemens had also been in the running to buy the Genoa-based firm but opposition by local politicians and trade unions to foreign takeovers derailed their attempts.
Looking forward, Finmeccanica is expected to pursue talks with CDP to sell its loss-making train unit AnsaldoBreda and its 40 percent stake in rail technology firm Ansaldo STS, which had attracted interest from foreign industrial groups Hitachi and General Electric.
Two sources familiar with the situation said Finmeccanica CEO Alessandro Pansa aims to complete those sales before his mandate expires in April 2014, paving the way for a further reduction of its debt.
A streamlined structure would help Finmeccanica complete its restructuring process and free it to set its sights on any possible consolidation in the European defence industry.
Shares in Finmeccanica ended up 0.6 percent at 5.23 euros on Friday, giving the company a market value of about 3 billion euros. In the last month, shares have risen 33 percent on expectations of an imminent deal to sell Ansaldo Energia.