ALSTOM confirmed on April 19 that it has entered into a binding agreement with Knorr-Bremse to sell its North American conventional signalling business for around €630m.

Alstom says the transaction is part of the comprehensive corporate action plan announced in November 2023 in response to a cash flow warning in its half-year results for the 2023-24 financial year.

Alstom CEO, Mr Henri Poupart-Lafarge, said at the time that the negative free cash flow of €1.12bn was a “clear call for change.”

"We are pleased to sign this agreement, which marks an important step in the implementation of our action plan,” Poupart-Lafarge says. “It evidences the work of our North American signalling employees, who have built and advanced this very successful business over the past few years.”

Alstom and Knorr-Bremse say the transaction is only subject to customary conditions, including regulatory approval, and they expect to close the sale in September.

Knorr-Bremse says the acquisition will enable it to enter the “highly attractive” control, command and signalling (CCS) segment, becoming a leader in the US market. It also describes the deal as a significant step in the company’s transformation from a supplier of rolling stock systems to a supplier serving “the entire rail ecosystem.” Knorr-Bremse says the CCS market is worth €20bn globally, making it “highly attractive.”

“For the Knorr-Bremse Rail Vehicle Systems division, the acquisition of this profitable business creates new prospects for profitable growth, technological competence, and future digital business models,” the company said in a statement.

Alstom Signalling North America reported revenue of €300m and an Ebit margin of approximately 16% in preliminary results for the financial year that ended on March 31.

Knorr-Bremse adds that as Alstom Signalling North America possesses the largest installed base of signalling, train detection and level crossing technology, especially in the freight segment in North America, as well as a very large share of the aftermarket, Knorr-Bremse will be able to offer a CCS technology platform to the region’s operators and system providers “under one roof.”

The transaction will also strengthen its Rail Vehicles Systems division’s ability to support digitalisation by providing access to large volumes of infrastructure data that could support Software as a Service (SaaS) applications.

“The transaction pursues a compelling industrial logic and is a very good match for our development and growth path, as we announced in our Boost 2026 strategy programme,” says Mr Marc Llistosella, Knorr-Bremse CEO.

Alstom says it will continue to serve other segments of the North American signalling market, notably with CBTC and ETCS.

Alstom also confirmed on April 19 that it will reveal further details of its plan to maintain a “solid and sustainable investment-grade rating” and its €2bn deleveraging target in its full-year results announcement on May 8.