Thales and Hitachi are entering exclusive negotiations on the sale of Thales’ railway signalling business valued at €1.66bn (£1.4bn).
Thales is carving out its Ground Transportation Systems Global Business Unit (GTS), which the company says employs 9,000 people across the world. GTS’s rail technology also offers train control systems and face collection services. It benefits around 8bn passengers every year.
French firm Thales is looking to streamline its operations and assure shareholders and investors of the core focus of the business: high tech equipment for aerospace, defence and digital identity and security.
Thales’ boss Patrice Caine hailed the sale of the unit as a “major strategic move” that would allow the business to “sustainably deliver double-digit margins” for their core activities.
Hitachi Rail, from Japan’s Hitachi group, says it expects this agreement to enhance its railway offering to new markets.
Andrew Barr, boss of Hitachi Rail, said the acquisition would “help us grow to become a major player” in the rail signalling industry.
The exact purchase price will be determined after customary adjustments. The deal is expected to be closed by the end of 2022 or early 2023 and the transaction will be paid in cash.
The announcement of the acquisition comes in a context in which industry players are consolidating their activities as independent players align themselves with bigger industrial groups. In January, train maker Alstom closed its purchase of Bombardier Transportation, the jet manufacturer’s rail business, for €5.5bn (£4.7bn).
Switzerland’s Stadler Rail and Spain’s CAF had also been shortlisted by Thales for the sale of the unit.