* Chinese group to pay 400 mln euros for 40 percent stake
* Adds to flurry of power sector consolidation
* Two production JVs and research centre planned in China
* Ansaldo to develop new gas turbine with Doosan
(Adds advisers in paragraph 8)
By Elvira Pollina
GENOA, Italy, May 8 Shanghai Electric Group
has agreed to pay 400 million euros ($555 million)
for 40 percent of power engineering company Ansaldo Energia,
becoming the latest Chinese company to buy into Italy's
fledgeling economic recovery.
The deal, announced on Thursday at a ceremony with Italian
Prime Minister Matteo Renzi, will allow Ansaldo to boost sales
by entering the huge Asian market and gives the Chinese access
to the Italian company's technology.
Shanghai Electric, a conglomerate that also makes and
distributes industrial equipment, will buy the stake in the 161-
year-old producer of power plants and turbines from state-backed
private equity fund Fondo Strategico Italiano (FSI), the fund
said in a statement.
In a rapidly consolidating industry, the Chinese group
emerged as surprise buyer for Ansaldo, which had been courted
for years by suitors including South Korea's Doosan Heavy
Industries and Germany's Siemens.
The deal gives the Chinese access to gas turbine technology
it previously did not have, posing a possible threat to U.S. and
German groups that dominate that business in China, said two
sources familiar with the matter. That access, however, will not
be unlimited, one of the sources said.
Under the agreement, Ansaldo Energia and Shanghai Electric
will set up two joint ventures in China to produce gas turbines
for Asia, which represents 50 percent of the world market, as
well as a research and development centre in Shanghai.
The parties started talks at the end of last year, one of
the sources told Reuters, adding that the agreed price gives
Ansaldo Energia an enterprise value of more than nine times core
The financial advisor of FSI and Ansaldo Energia was Lazard,
while Shanghai Electric was advised by Rothschild.
The Italian company has also signed a cooperation deal with
former suitor Doosan to develop a new gas turbine for North
America, Brazil, Saudi Arabia and South Korea, FSI said.
The deal adds to a flurry of consolidation in the sector, as
sector players face intensifying global competition.
France's Alstom is reviewing a $16.9 billion
buyout offer from U.S. group General Electric and has
given Siemens until the end of May to make a rival bid.
Genoa-based Ansaldo confirmed it plans to launch an initial
public offering (IPO) in the medium term.
Its former owner Finmeccanica, which still holds
15 percent of Ansaldo, would exit the company through the IPO,
FSI head Maurizio Tamagnini told reporters in Genoa.
Finmeccanica last year sold 85 percent of Ansaldo to FSI to
cut debt and focus on its defence and aerospace business.
Recent tie-ups between Italian energy firms and companies in
China, the world's biggest energy market, include a pact signed
by utility Enel and State Grid Corporation of China in
April to develop smart grid technologies.
Enel is also planning to sign an agreement with China
Huaneng Group this year. China's central bank bought about 2
percent each in Eni and Enel in March.
FSI said the deal with Shanghai Electric was the largest
Italian-Chinese deal so far and could represent a "major
benchmark" for industrial relations between the two countries.
($1 = 0.7214 Euros)
(Additional reporting by Danilo Masoni in Milan; Editing by
Lisa Jucca and Robin Pomeroy)