22 Sep 08. Finmeccanica, Italy’s defence and industrial conglomerate, responded on Monday to market concerns over its planned acquisition of DRS Technologies by insisting that it was in good financial shape and would not be forced into a rushed sale of its Ansaldo Energia subsidiary. Alessandro Pansa, chief financial officer, told the FT that Finmeccanica did intend to go ahead with its planned rights issue of up to €1.4bn. However, it could put off the flotation of Ansaldo, its 155-year-old power generation division, set for March or April next year, if market conditions were not favourable by then. “We can decide not to do it…our financial situation is not stressed,” he said. Mr Pansa stressed that Finmeccanica has “the money tomorrow” for the $5bn purchase of DRS Technologies – its gateway into the US defence sector – once official approvals are received from the US Congress and the Pentagon. Finmeccanica signed a €3.2bn syndicated loan with 33 banks on July 14 and was “lucky or smart” to make the change into dollars at favourable rates that month, he noted. Commenting on the roughly 25 per cent fall in Finmeccanica’s share price since the news of the DRS Technologies acquisition leaked on May 12, Mr Pansa said some investors were sceptical of Finmeccanica’s ability to refinance itself through the rights issue and flotation of Ansaldo. He also attributed the decline to general market conditions and scepticism among investors over the synergies that could be reached with DRS. Analysts, including a research note by JPMorgan last month, believe Finmeccanica’s offer of $81 a share for DRS was overpriced. Mr Pansa said three leading investment companies had taken advantage of the “weakness” in Finmeccanica’s share price to increase their stakes to more than 2 per cent each. Asked if he thought the share fall was unjustified, Pier Francesco Guarguaglini, chief executive, replied: ”Yes. I don’t understand why these rumours come out.” Commenting on cuts in UK and Italian defence spending – two significant markets for Finmeccanica – Mr Guarguaglini said they would not have such a large impact because of the company’s growing global reach. He said the AgustaWestland unit was in talks with the UK government over “reshaping” the £1bn Future Lynx helicopter programme. He gave no details. Giovanni Gasparini, senior analyst with Italy’s International Affairs Institute, says that, with some one-third of its shares owned by the Italian government, Finmeccanica was not normally worried about its share price. But, he noted, this was an “awful moment” to have to sell Ansaldo. He said the company still had a problem of identity – not fully a defence group and still partly under state control.
One example of this was pressure from the Italian government on Finmeccanica to
acquire Atitech, the heavy maintenance unit of lossmaking Alitalia. Asked if he intended to bid for any parts of near-bankrupt Alitalia, which is up for tender, Mr Guarguaglini was non-committal. “It depends,” he said. “We need to understand better.” But he also noted that Finmeccanica had not joined the group of government-backed investors who had made a bid for Alitalia and then withdrawn last week in the face of union resistance to job and pay cuts. (Source: FT.com)
Sep 08. The appetite for acquisitions by Indian IT companies remains undiminished with software services majors Tata Consultancy Services (TCS) and Tech Mahindra eyeing the India design services unit of the $31-billion Flextronics, sources said. The global electronic manufacturing services (EMS) giant Flextronics has put the design services unit in Bangalore on the block as part of a worldwide restructuring. When contacted, TCS declined to comment, while Tech Mahindra said it was looking at “inorganic growth options though we have nothing specific to comment”. Flextronics officials, based locally, could not be reached for immediate comments. The Indian design services outfit employs about