(Reuters) – Thales said on Friday that the completion of Hitachi Rail’s proposed acquisition of its rail signaling business would likely be pushed back to the second half of 2023, rather than the start of the year, due to the opening of an in-depth investigation by the UK Competition Authority (CMA).
The Competition and Markets Authority has expressed concern about the risk that this transaction will lead to higher fares for passengers.
“The parties are currently studying this decision. However, it is now likely that the closing of this transaction will take place in the second half of 2023, rather than the beginning of 2023,” Thales said in a press release.
The Thales share yielded 1.2% at 09:55 GMT.
The railway company Network Rail, main customer for the signaling of the main lines across the Channel, is preparing a call for tenders for a new signaling contract, indicated the CMA.
However, this signaling on the main lines is currently only provided by two groups, Alstom and Siemens, and the lack of competition could increase the costs of operators, with negative consequences for taxpayers and passengers, according to the Office of Rail and Road, the UK rail and motorway regulator.
In this context, the transaction between Hitachi and Thales could eliminate a credible competitor from the new tender, she explains.
The proposed acquisition by Japanese Hitachi Rail of Ground Transportation Systems (GTS), the rail signaling activity, for an enterprise value of 1.66 billion euros was unveiled in August 2021.
Since then, Thales said in its press release on Friday, the two groups have obtained more than two-thirds of the required regulatory authorizations, including authorization from 9 of the 13 competition authorities concerned.
Hitachi Rail is currently in discussions with the European Commission’s Directorate-General for Competition in order to obtain approval for this transaction for the European Union, he added.
(Report Piotr Lipinski in Gdansk, French version Jean-Stéphane Brosse, edited by Blandine Hénault)