Hitachi Rail agreed to acquire Thales’ Ground Transportation Systems (GTS) business for an enterprise value of €1,660 m (~¥215 bn).
GTS, a division of Thales, is a global leader in Rail Signalling and Train Control Systems, Telecommunications and Supervision systems and Fare collection solutions. In FY2020, GTS generated €1.6bn of revenues and today employs around 9,000 employees across 42 countries and is headquartered in Germany, France and Canada.
Hitachi Rail expects GTS to show continued revenue and EBIT growth and by closing, the implied standalone forward EV/EBIT valuation multiple should be around 10x, the company said in its statement.
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, it added.
The Business consists of four segments: mainline railroad signalling systems, urban rail signalling, integrated communication systems and revenue collection systems. Around 50% of the Business is dedicated to digital offerings, and the company employs a wealth of digital talent in the mobility sector.
Andrew Barr, Chief Executive Officer, Hitachi Rail, said: “Today’s 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. The strong teams, customer relationships and technologies at GTS will help us grow to become a major player, further enabled by Lumada and the digital engineering of our teams at GlobalLogic and the broader Hitachi Group.”
Philippe Keryer, EVP Strategy, Research & Technology, Thales said: “After discussions with key market players, Thales has selected the best industrial partner to ensure a successful long term development of its ground transportation 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.”
With a presence in 38 countries across six continents and over 12,000 employees, Hitachi Rail is a fully integrated, global provider of rail solutions across rolling stock, signalling, operation, service & maintenance, digital technology and turnkey solutions.
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