Thales sells its railway signaling to Japanese Hitachi

It will not be the French Alstom, the German Siemens or the Spanish CAF, but the Japanese Hitachi. Thales announced on Wednesday August 4 that it had entered into exclusive negotiations with the Japanese industrial conglomerate in order to sell it its activity in railway signaling systems for an enterprise value of 1.66 billion euros, a price that will be revised. later. The operation received the green light from the State, a shareholder in the electronics and defense group (25.7%), and will be finalized at the start of 2023.

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“Hitachi Rail’s record was the best in every way : industrial, economic value, prospects for employees ”, explains Patrice Caine, CEO of Thales. Present in 42 countries with headquarters in France, Germany and Canada, this “land transport systems” (GTS) activity employs nearly 9,000 people and weighs 1.6 billion, or 10% of the company’s sales. In deficit in 2015, it was rectified and its profitability increased to 7%, with a target of 8.5%.

So why sell this nugget? The reduction in Thales’s portfolio will reassure investors, who criticized the dispersion of activities. But the reasons for such an operation are primarily industrial and technological. Traffic and telecommunications management systems have become strategic in the eyes of carriers such as SNCF and RATP for reasons of cost, efficiency and safety.

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Operators, especially operators of metro networks, are calling for “Integrated solutions” and turnkey, notes Mr. Caine. Sensors of all kinds are more and more embedded in rolling stock. This “Passage from the track to the train”, according to Philippe Keryer, deputy general manager for strategy, research and technology, is pushing for integration across the entire value chain. However, Thales remains the only “pure player” on the market, which forces it to form partnerships with manufacturers to win calls for tenders, and makes it lose efficiency.

“Important strategic move”

Consolidation therefore continues in railway equipment and services. Hitachi, one of the manufacturers associated with the development of the Japanese high-speed train Shinkansen, had fallen behind its competitors Alstom and Siemens Mobility, respectively four times and twice as large in terms of turnover, despite the acquisition in 2015 AnsaldoBreda (equipment) and Ansaldo STS (signaling), which belonged to the Italian conglomerate Finmeccanica (now Leonardo), refocused like Thales on aerospace, defense and security.

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