(Finance) – Hitachi Rail today announced the completion of the 1.660 million euro acquisition of Thales’ Ground Transportation Systems (GTS) division, thus expanding its global presence to 51 countries, with the majority of revenues now coming from its higher-margin systems and signaling businesses. With this acquisition, Hitachi Rail – the company says in a note – “takes on the leadership role in the global mobility sector”. The closing strengthens the company’s strategic focus on helping existing and potential Hitachi Rail and GTS customers transition to sustainable mobility, i.e. the transition from private to sustainable public transport, through digitalisation.
The agreement marks an important step forward in the process of acquisitions and organic growth that Hitachi Rail is achieving annual revenue target exceeding one trillion yen with an increase in the company’s overall revenues a 7.3 billion euros (1,100 billion yen; 7.9 billion dollars) in fiscal year 2023 (pro forma). It also supports the company’s profit growth by accelerating the evolution of the revenue profile, the post-transaction majority of which (approximately 60%) will come from the higher-margin systems and signaling division. The signaling division will have over 26,000 km of main railway lines and 4,600 km of metro lines under its belt worldwide.
The Hitachi Rail headquarters in Japan, Italy, the United Kingdom and the United States they are strategically complementary to GTS’ major locations in Germany, France, Spain and Canada; Furthermore, both companies benefit from strong reputations in the wider European, Middle East and Asia-Pacific markets.
The closing of the agreement involves 9 thousand highly qualified people who join Hitachi Rail, thus bringing the total number of employees to 24 thousand worldwide. This operation also enhances the entire portfolio of vehicles and rolling stock, turnkey urban systems, digital signaling solutions for main railway lines or freight transport and communication and supervision systems.
The deal nearly doubles Hitachi Rail’s engineering capacity and increases the scope of its investments in innovation to benefit from a cutting-edge digital product offering, including signaling, ticketing, operations and cybersecurity solutions. The company has established a new “Agile Innovation” team which will combine the expertise of GTS’ five global Digital and Competence Centers with the digital strengths of Hitachi Group companies.
“Hitachi – declared the president and CEO of Hitachi, Keiji Kojima – continues to transform itself to become a global leader in the Social Innovation business and is undertaking a change of approach to achieve growth as foreseen by the Mid-Term Management Plan 2024. The acquisition of Thales’ GTS division represents an important milestone in this context and we are pleased to have achieved this in the final year of the plan. By welcoming new colleagues to Hitachi Rail, Hitachi’s Railway Systems business strengthens its presence in the global market. Hitachi will enhance its digital services by leveraging IT, OT and operational products in the mobility sector, and solve global social challenges through co-creation with customers. Hitachi will continue to support its customers’ digital and green transformation and contribute to the realization of a sustainable society.”
“The completion of this transaction – he declared Giuseppe Marino, Group CEO Hitachi Rail – it is a historic moment for our business which now extends to 51 countries with an increase in revenues to 7.3 billion euros globally – Fiscal year 2023 pro-forma –. Hitachi Rail’s increased global reach and accelerated innovation is the start of an exciting new chapter that will deliver greater value and growth in new markets. Together with colleagues from Thales’ Ground Transportation Systems, we are able to better ensure the transition towards sustainable mobility for the best transport companies in the world. By combining our teams, our engineering capabilities have nearly doubled, resulting in faster innovations and more advanced technology-based solutions for our customers.”
The agreement marks an important step forward in Hitachi’s long-term strategy to transform its businesses around the concept of “Social Innovation”. The Group led a strategic program aimed at redefining its portfolio of companies in essential sectors that provide the infrastructure and technology that power the advancement of sustainable societies. The program sees the Group’s companies focus on key sectors in line with the main trends shaping the world today: the energy transition, the digital and AI revolution and the transition towards sustainable mobility.
For Hitachi Rail, the acquisition is in line with the redefinition of the Group and – we read in the note – “will offer all its customers the opportunity to benefit from a wider range of products and solutions. An increase in investments in digital solutions and innovation translates into more advanced products and new business models The new company is also set to achieve greater cost competitiveness by improving procurement effectiveness, optimizing engineering capabilities and investment in research and development.”