- Entry into exclusive negotiations with Hitachi Rail on the sale of “Ground Transportation Systems” business, for an enterprise value of € 1,660 million
- Compelling valuation reflecting effective turnaround
- Reinforcement of Thales’s strategic focus on 3 long-term growth markets: Aerospace, Defense & Security, Digital Identity and Security, driving accelerated EBIT margin accretion and further deleveraging
- Combined GTS and Hitachi Rail business to be positioned as a global leader in the rail signaling market
- Employee representative bodies of both Thales and Hitachi Rail are being consulted on this project, which is also subject to usual closing conditions
Thales (Euronext Paris: HO) and Hitachi Rail announce that they are entering into exclusive negotiations on the sale of Thales’s Ground Transportation Systems Global Business Unit (“Ground Transportation Systems” or “GTS”) for an enterprise value of € 1,660 million.
With around 9,000 employees at the end of 2020, Ground Transportation Systems is a global leader in Rail Signaling 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.
Thanks to the engagement of GTS employees and, more globally, of Thales’s management team, the 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.
Thanks to the strong technical, geographical and commercial complementarities between Hitachi Rail and Ground Transportation Systems, the combination will create a rail signaling provider with a broader product offering and stronger capabilities to meet customer demand around the world. In addition, it will offer GTS’s employees enhanced professional opportunities. The combined strength of Hitachi and GTS’s digital expertise will also help Hitachi Rail to accelerate its Mobility as a Service (“MaaS) offering.
Through this transaction, Thales reinforces its strategic focus on 3 long-term high technology growth markets: Aerospace, Defense & Security, and Digital Identity & Security. Each of its businesses is an industry pure player focused on intelligent systems and digital solutions, able to sustainably deliver double-digit EBIT margins. This move enables the Group to now target an EBIT margin of 12% in the medium-term.
The transaction will also strengthen Thales’s balance sheet and provide substantial cash optionality.
“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.” – Philippe Keryer, EVP Strategy, Research & Technology, Thales
“With this major strategic move, we will be able to focus on the development of our 3 high-tech long-term growth businesses, each of them able to sustainably deliver double-digit margins — Aerospace, Defense & Security, and Digital Identity & Security — further strengthening their best-in-class market position.” – Patrice Caine, Chairman and CEO, Thales
“Announcement marks an exciting opportunity for the teams at Hitachi Rail and Thales’s Ground Transportations 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 signaling capabilities as part of our turnkey offering, but we are also bringing together our digital and MaaS 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.” – Andrew Barr, Chief Executive Officer, Hitachi Rail
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