Hitachi secures final approval for €1.66bn Thales acquisition

HITACHI Rail has been given clearance to proceed with its €1.66bn acquisition of Thales’ Ground Transportation Systems (GTS) business, after receiving conditional approval from the European Commission (EC) on October 30.

The EC’s approval means that the deal has now received clearance from all 13 competition authorities which reviewed the acquisition. As a condition of securing approval for the acquisition in Britain and the European Union (EU), Hitachi Rail has agreed to divest its mainline signalling businesses in France, Germany and Britain.

The EC says its investigation showed that the transaction would have reduced competition and led to higher prices and less innovation in the markets for mainline signalling projects, including overlay and resignalling projects in both Germany and France as well as interlocking projects in France.

To address the commission's concerns, Hitachi Rail offered to divest its mainline signalling platforms in both countries, including international locations, which fully addressed the EC’s concerns. This will also preserve competition by removing the horizontal overlap between the parties in the French and German markets for interlockings and automatic train protection (ATO) wayside systems for mainline signalling.

The EC says the commitments made by Hitachi will enable the purchasers of the divested businesses to run them as a viable competitive force in the market on a lasting basis. The commission will closely monitor the divestment process, including approving the purchasers of the divested businesses.

Following positive feedback from market testing, the commission concluded that the modified transaction would no longer raise competition concerns.

Hitachi Rail has also committed to divest its mainline signalling business in Britain following concerns raised by Britain’s Competition and Markets Authority (CMA). The CMA then gave its approval for the deal on October 4.

Hitachi Rail announced the acquisition of Thales GTS in August 2021. The transaction was first notified to the commission on October 4 2022, but the parties withdrew their notification on November 3 2022 in view of the competition concerns identified by the EC. The parties renotified the transaction to the commission on September 14 2023.

Hitachi previously strengthened its mainline and urban rail signalling capabilities with the acquisition of Italy’s Ansaldo STS, which was completed in January 2019.