Thales enters into agreement to sell its Ground Transportation Systems business to Hitachi Rail

Thales (Euronext Paris: HO) and Hitachi Rail announce on 04.08.2021 that they are entering into exclusive negotiations on the sale of Thales’s Ground Transportation Systems Global Business Unit (“Ground Transportation Systems” or “GTS”) for an enterprise value of € 1,660 million:

“With this major strategic move, we will be able to focus on the development of our 3 high-tech long-term growth businesses, each of them able to sustainably deliver double-digit margins – Aerospace, Defense & Security, and Digital Identity & Security – further strengthening their best-in-class market position.” – Patrice Caine, Chairman and CEO, Thales.

  • Entry into exclusive negotiations with Hitachi Rail on the sale of “Ground Transportation Systems” business, for an enterprise value of € 1,660 million
  • Compelling valuation reflecting effective turnaround.
  • Reinforcement of Thales’s strategic focus on 3 long-term growth markets: Aerospace, Defense & Security, Digital Identity and Security, driving accelerated EBIT margin accretion and further deleveraging.
  • Combined GTS and Hitachi Rail business to be positioned as a global leader in the rail signaling market.
  • Employee representative bodies of both Thales and Hitachi Rail are being consulted on this project, which is also subject to usual closing conditions.

Updated 2021 financial outlook:

Since the transport segment will be treated as discontinued operations in the 2021 financial statements, Thales’s 2021 financial outlook is updated as follows:

  • As in 2019 and 2020, a book-to-bill ratio above
  • Sales in the range of €15.8 billion to €16.3 billion
  • An EBIT margin in the range of 9.8% to 10.3%, up 180 to 230 basis points from 2020.

Next steps:

  • Employee representatives of both Thales and Hitachi Rail will be informed and consulted on this project according to the laws of involved countries.
  • The completion of the transaction will require the carve-out of the business in several countries, and is subject to usual conditions including regulatory and antitrust clearances.It is expected to close by the end of calendar year 2022 / early in calendar year 2023.

Deal background:

  • Scheme: 100% acquisition of “Ground Transportation Systems” business by Hitachi Rail following carve-out from Thales, subject to approvals from employee representatives and relevant regulatory bodies
  • Price: Enterprise Value of € 1,660 million(¥215bn), corresponding to an implied valuation of 13.8x EV/EBIT, based onreportedH2 2020-H1 2021 segment EBIT.The final purchase price will be determined after customary adjustments for net working capital and net debt based on actual amounts at the closing date.
  • Source of funds: Paid by cash at hand at closing
  • Offer approved by both Thales’s and Hitachi’s Boards of Directors
  • Transaction advisors: In connection with the transaction, Lazard acted as financial advisor to Thales, and BDGS, Baker McKenzieand August Debouzy acted as legal counsels.

About Thales:

Thales (Euronext Paris: HO) is a global leader in advanced technologies, investing in digital and “deep tech” innovations –connectivity, big data, artificial intelligence, cybersecurity and quantum computing –to build a confident future crucial for the development of our societies. The Group provides its customers –businesses, organisations and governments –in the defense, aeronautics, space, transport, and digital identity and security domains with solutions, services and products that help them fulfiltheir critical role, consideration for the individual being the driving force behind all decisions.Thales has 81,000 employees in 68 countries. In 2020 the Group generated sales of €17 billion.

About Hitachi Rail Ltd.:

Hitachi, Ltd. (TSE: 6501), headquartered in Tokyo, Japan, is focused on its Social Innovation Business that combines information technology (IT), operational technology (OT) and products. The company’s consolidated revenues for fiscal year 2020 (ended March 31, 2021) totaled ¥8,729.1bn ($78.6bn), with 871 consolidated subsidiaries and approximately 350,000 employees worldwide. Hitachi is working to increase social, environmental and economic value for its customers across six domains; IT, Energy, Industry, Mobility, Smart Life and Automotive Systems through Lumada, Hitachi’s advanced digital solutions, services, and technologies for turning data into insights to drive digital innovation. For more information on Hitachi, please visit the company’s website at

Source: Thales-Press Release