Hitachi Rail to acquire Thales signalling business

Thales’ Ground Transportation SystemsHitachi Rail entered into exclusive negotiations to acquire Thales’ Ground Transportation Systems (GTS) business for an enterprise value of EUR 1.66 billion, with the final purchase price to be determined after customary adjustments. The acquisition value corresponds to an implied valuation of 13.8x EV/EBIT, based on reported H2 2020-H1 2021 segment EBIT. The transaction is expected to close in late FY2022, in calendar year 2023, subject to the usual conditions including regulatory and antitrust clearances.

The transaction will be paid by cash at hand at closing with the offer being approved by both Thales’s and Hitachi’s Boards of Directors.

Employee representatives of both Thales and Hitachi Rail will be informed and consulted according to the laws of the countries concerned throughout the process. Hitachi intends to promote the conditions for a smooth and successful integration of the Business and is willing to take a number of social commitments in this respect. In addition, it will offer GTS’s employees enhanced professional opportunities.

As a result of this agreement, Hitachi Rail expects to drive growth by expanding the scale of its rail signalling systems business globally, bringing an enhanced turnkey railway offering to new markets around the world.

The combined business will be positioned to become a global leader in the rail signalling market. The combined strength of Hitachi and GTS’s Digital expertise will also help Hitachi Rail to accelerate its ‘Mobility as a Service’ (MaaS) offering for a global customer base.

With the complementary strength of GTS’s signalling activities, and rapid growth in MaaS and digitisation in the rail sector, GTS will help Hitachi Rail to potentially reach EUR 7.7 billion revenue and double-digit adjusted operating income ratio by FY2026, or around four years from closing.

“The announcement marks an exciting opportunity for the teams at Hitachi Rail and Thales’ Ground Transportation Systems business to create new value for our customers, cities and passengers around the world. Not only will we grow the reach of our core signalling capabilities as part of our turnkey offering, but we are also bringing together our digital and Mobility as a Service capabilities,” Andrew Barr, Chief Executive Officer, Hitachi Rail, said.

The Thales’ Ground Transportation Systems consists of four segments: mainline rail signalling systems, urban rail signalling, integrated communication systems and revenue collection systems. Around 50% of the GTS is dedicated to digital offerings, and the company employs a wealth of digital talent in the mobility sector.

“After discussions with key market players, Thales has selected the best industrial partner to ensure a successful long-term development of its ground transport business. This move is creating significant value for our clients, employees and shareholders, and enables Ground Transportation Systems to be at the forefront of growth in sustainable mobility,” Philippe Keryer, EVP Strategy, Research & Technology, at Thales said.

With around 9,000 employees at the end of 2020, Thales’ Ground Transportation Systems is a global leader in rail signalling and train control systems, telecommunications and supervision systems and fare collection solutions, key technologies for a more sustainable mobility. Around 8 billion passengers benefit from GTS’s rail technologies every year.

GTS business achieved a remarkable turnaround over the past 5 years, delivering in 2020 and H1 2021 its best financial performance of the past 7 years, in spite of the Covid-19 crisis.

Thales says that the transaction reinforces its strategic focus on 3 long-term high technology growth markets – the Aerospace, Defense & Security, and Digital Identity & Security. The transaction will also strengthen Thales’s balance sheet and provide substantial cash optionality.


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