Finland to sell Destia to Ahlstrom Capital: source

HELSINKI Mon May 26, 2014 3:01am EDT

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HELSINKI (Reuters) - Finland's five-party government has agreed to sell Destia, a road and rail construction group fully owned by the state, to private equity firm Ahlstrom Capital for around 150 million euros ($204 million), a source with knowledge of the plan told Reuters.

The deal is expected to be announced on Monday, the source, speaking under condition of anonymity, said. Both the government and Ahlstrom Capital declined to comment.

Destia, with annual sales of around 500 million euros, competes with companies such as YIT (YTY1V.HE), NCC (NCCb.ST) and Skanska (SKAb.ST), as well as VR Track, another state-owned company.

The company has in the last few years slashed jobs and sold assets in a bid to protect profitability amid Finland's falling construction market. Last year, the firm's core operating profit rose slightly to 19 million euros.

The Finnish government in March agreed to raise around 1.9 billion euros from asset sales in 2014-2015 as it looks to reduce borrowing.

Pressure from labor unions has limited sell-offs in recent years. The state still owns stakes in 15 of Helsinki's top listed firms such as Sampo (SAMAS.HE) and Stora Enso (STERV.HE), and in 45 others.

Ahlstrom Capital recently took part in a rescue package of steel firm Outokumpu (OUT1V.HE) along with the state. ($1 = 0.7336 Euros)

(Reporting by Jussi Rosendahl; editing by Jason Neely)

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