* Govt says sale of transportation activities is essential
* Finmeccanica aims to sell assets in shortest time possible
* Shares rise more than 2 percent
(Adds comments from CEO and analysts, background, share price)
By Danilo Masoni
MILAN, March 20 The Italian government led by
Matteo Renzi has endorsed plans by state-owned Finmeccanica
to sell its rail assets, raising hopes that a deal to
help the group focus on its more profitable aerospace and
defence businesses may be closer.
Finmeccanica put up for sale its loss-making unit
AnsaldoBreda, a train maker, and its stake in rail signalling
firm Ansaldo STS more than two years ago to cut a heavy
debt pile accumulated under a previous management.
But opposition from politicians and trade unions to foreign
takeovers as well as a management reshuffle after a corruption
scandal delayed the process, prompting rating agencies to cut
the group's 3.3 billion euros ($4.6 billion) net debt to junk.
Finmeccanica's decision to sell its rail assets was an
essential element for the success of the group's plans, the
finance and industry ministries said in a joint statement on
The much-awaited endorsement comes only one month after a
new government led by centre-left leader Renzi took power.
Finmeccanica is 30 percent owned by the Italian state and needs
its backing for sensitive strategic issues like disposals.
Finmeccanica CEO Alessandro Pansa said he was upbeat about
the sale of the group's transportation units but declined to
give more details because of the sensitivity of the issue.
"We want to be successful in the shortest possible period of
time, we believe we can strike a deal, but this is the only
thing I can say," Pansa told analysts on Thursday during a
conference call following the release of the group's results.
Finmeccanica said on Wednesday it had posted its first
profit in three years in 2013, as it reaped the fruits of a
restructuring. But losses at AnsaldoBreda contributed to a 5.7
percent drop in core earnings to 949 million euros.
Selling AnsaldoBreda would eliminate a source of cash
absorption, while the group's 40 percent stake in profitable STS
is worth around 600 million euros at current market prices.
U.S. industrial giant General Electric, Chinese
companies China Cnr Corporation and Insigma
, and Japan's Hitachi, have expressed
interest in the assets.
Among possible contenders are France's Thales and
Canada-based Bombardier, said a source close to the
matter. Thales and Bombardier were not immediately available for
Shares in Finmeccanica rose 2.5 percent at 1129 GMT,
outperforming a weaker Italian market.
"It seems the Italian government has given its go-ahead for
the sale of the transportation assets, that's good news," Banca
Akros analyst Gabriele Gambarova said in a note.
In its statement, the Italian ministries said the sale could
involve Italian institutional investors.
($1 = 0.7189 Euros)
(Additional reporting by Dominique Rodriguez in Paris, Editing
by Lisa Jucca and Stephen Powell)