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Stake deal part of rising global M&As
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SHANGHAI Electric’s plan to buy a 40 percent stake in Italian power engineering firm Ansaldo Energia comes as merger and acquisition activities have increased in the global power equipment industry.
The 400-million-euro (US$554 million) deal, when completed, will give Shanghai Electric access to key technology in gas turbine while helping its Italian partner boost sales in Asia, which accounts for half of the world’s gas turbine market.
The deal will see the partners form two joint ventures in China to produce gas turbines for Asian markets.
They will also set up a research and development center in Shanghai.
Trading in shares of Shanghai Electric, China’s leading power generation equipment and machinery maker, was halted in Shanghai and Hong Kong yesterday after the overnight notice from the Italian side. They will resume next Monday.
The deal comes amid increasing mergers and acquisitions in the global power equipment industry. General Electric’s latest US$17 billion offer for French company Alstom’s energy business could face a rival offer from Germany’s Siemens.
“China’s homegrown companies have to catch up as competition intensifies,” said Armand Cao, consulting director of energy and power at Martec.
Shanghai Electric will buy the Ansaldo stake from state-backed investment fund Fondo Strategico Italiano, which had received other offers from Siemens and South Korea’s Doosan Heavy Industries.
The latest deal follows recent energy tie-ups between China and Italy. Last month, the State Grid Corp of China and Italian utility Enel agreed to jointly develop smart grid technologies. In March, China’s central bank raised its stakes in Enel and oil and gas producer Eni to more than 2 percent each.
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