July 11 (Bloomberg) -- Siemens AG, Europe’s largest engineering company, has ceased pursuing a bid for Finmeccanica SpA’s power plant construction unit Ansaldo Energia SpA, according to people familiar with the plans.
Siemens, which was the preferred bidder for Ansaldo Energia in talks last year, sees too little technological benefit and too much overlap, the people said, asking not to be identified as the considerations are not public. A deal would also have faced resistance from unions on both sides as Munich-based Siemens’s own energy unit is cutting jobs amid declining demand for power plants, they said.
The change in Siemens’ stance may boost the chances of South Korea’s Doosan Heavy Industries, which in February said it’s considering bidding for Ansaldo Energia. Samsung Techwin said in March it decided against an offer. Ansaldo Energia was valued at 1.2 billion euros ($1.6 billion) in 2011 when private-equity firm First Reserve bought a 45 percent stake. Siemens, Doosan and Finmeccanica declined to comment.
A sale to Doosan would raise competition for Siemens’ own power plant business and one of the German company’s motives for a potential bid was to stop Asian rivals from accessing Ansaldo’s technology, the people said.
Finmeccanica Chief Executive Officer Alessandro Pansa signaled in Genoa today that Ansaldo Energia wouldn’t be sold outright to a foreign investor.
“Italian capital and foreign capital need to co-exist in our units so that international players have the incentive to guarantee the future of these companies in Italy, safeguarding plants, technology and qualified jobs,” he said according to news agency AGI. A Finmeccanica spokesman confirmed the comments.
Finmeccanica may ramp up efforts to sell the asset after it this month appointed Giovanni De Gennaro as chairman to succeed Giuseppe Orsi, who quit on Feb. 15 after his arrest over bribery allegations.
The leadership vacuum had threatened the plans of Finmeccanica, Italy’s biggest defense company, to raise 1 billion euros from unloading assets, including the sale of 55 percent of Ansaldo Energia. Finmeccanica, based in Rome, views a bid from Doosan more favorably since it would likely cut fewer jobs than Siemens, a person familiar with the matter said earlier this year.
Pansa promised to return to profit this year with the help of asset disposals. While he has ceased giving a time line for when disposals might happen, he confirmed they remain planned.
Amid rising charges for a failed push into solar energy and delayed train deliveries, Siemens CEO Peter Loescher in May cut the company’s profit forecast for the fourth time in his six-year tenure. It’s eliminating 1,200 to 1,400 jobs at three sites of its energy and infrastructure units to bolster profitability, people familiar with the matter said in March.
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