February 28, 2014 / 3:55 PM / in 4 years

UPDATE 1-Two Chinese companies eyeing Finmeccanica units

(Adds Finmeccanica, source, background)

MILAN, Feb 28 (Reuters) - China CNR Corporation and Insigma have expressed interest in buying Finmeccanica’s rail unit Ansaldo STS and loss-making train maker Ansaldo Breda, the Chinese firms said on Friday.

The state-owned Italian group put its rail and other non-core assets up for sale more than two years ago to cut debt and focus on its aerospace and defence businesses.

It has struggled to carry out the plan due to political opposition to foreign takeovers.

In an emailed statement, which gave no financial details, Shanghai-listed CNR and Insigma said they aimed to invest and relaunch the Finmeccanica units, keeping job levels and manufacturing operations in Italy.

They added they did not rule out joining forces with an Italian partner in the possible acquisition.

A sale would bring welcome cash into Finmeccanica at a time when it needs to complete a tough restructuring, helping the group to join an expected sector consolidation.

Finmeccanica, which declined to comment on Friday, holds 40 percent in Ansaldo STS, which has a market capitalisation of 1.45 billion euros ($1.98 billion).

Finmeccanica’s rail businesses have attracted interest from other potential buyers, such as U.S. industrial giant General Electric Co in September and Japan’s Hitachi Rail.

Any sale of the units would need a go-ahead from the Italian government given that the group is 30 percent owned by the state, a source familiar with the matter said.

At 1533 GMT, shares in Finmeccanica were up 2.2 percent at 7.13 euros and Ansaldo STS was up 2.9 percent at 8.28 euros. The broader Milan index was up 0.37 percent. ($1 = 0.7309 euros) (Reporting by Danilo Masoni, editing by Stephen Jewkes and Elaine Hardcastle)

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