Thales in advanced talks to sell railway signalling business

Thales in advanced talks to sell railway signalling business

PARIS - Thales, Europe's largest defence electronics company, confirmed on Wednesday it was in advanced talks to sell its railway signalling business to Japan's Hitachi in a deal which values the division at 1.66 billion euros.

The sale comes as the French firm looks to streamline its sprawling operations and reassure investors of its focus on making high-tech equipment for defence and aerospace industries.

The price tag of 1.66 billion euros corresponds to the enterprise value, including debt, of Thales' unit, dubbed Ground Transportation Systems.

It reflects a multiple of 13.8 times the unit's twelve-month earnings before interest and taxes Thales said in a statement, adding that it expected the deal to close by the end of 2022 or at the start of 2023.

The signalling unit, which also provides a train control system and fare collection services, is small compared with competitors.

The sale comes at a time of consolidation in the industry as larger players align themselves with independent groups.

In January, French train maker Alstom closed its 5.5 billion-euro acquisition of Bombardier railway business, making it the industry's No. 1 production company for towing.