Hitachi Rail has completed a €1,660m acquisition of Thales‘ Ground Transportation Systems to expand its global presence to 51 countries.

The acquisition was completed last Friday, 31 May, and means that signalling and systems, which provide a higher return, will now account for most of Hitachi Rail’s revenues.

In the financial year 2023, the combined business revenues of €7.3bn were in line for Hitachi Rail to achieve a longstanding target of surpassing ¥1 trillion annually.

The deal aligns with Hitachi Group’s sustainable growth strategy with a focus on mega trends of digitalisation and sustainability transformation and supports the company’s profit growth by continuing its shift toward the higher-return signalling and systems division.

Worldwide, it operates over 26,000 km of mainline railway and 4,600 km of urban metros, and in 2021 was awarded a contract to upgrade the signalling around Gloucester.

With the acquisition of Thales, Hitachi Rail has doubled its engineering capability and will increase investment in innovation to provide enhanced digital products in signalling, ticketing, operations and cyber security solutions.

Hitachi Rail has established a new Agile Innovation team to combine the digital strength of Hitachi’s Group companies with the expertise from Thales’ Ground Transportation Systems’ five global Digital Hubs & Competence Centres

The combined business will also provide greater cost competitiveness through more efficient procurement, optimising engineering capabilities, and increased R&D investment.

The acquisition accords with the long-term strategy of Hitachi Rail’s parent company, Hitachi Ltd., to transform its businesses around the concept of “Social Innovation”.

A strategic programme is reshaping Hitachi’s portfolio of companies around the essential sectors that provide the infrastructure and technology to underpin the progress of sustainable societies.

Hitachi continues its transformation to become a global leader in Social Innovation Business and is undergoing a mode change to achieve growth under the Mid-term Management Plan 2024.The acquisition of the Thales GTS business represents a significant milestone, and we are pleased to have achieved it in the final year of the plan.

By welcoming new Hitachi Rail colleagues, Hitachi’s Railway systems business has strengthened its presence in the global market. Hitachi will enhance its digital services by leveraging IT, OT, and products on an expanded installed base in the mobility arena, and solve global social challenges through co-creation with customers. Through this acquisition and Hitachi’s overall growth, we will continue to support our customers’ digital and green transformations and contribute to the realisation of a sustainable society.

Keiji Kojima, Hitachi President and CEO

Completing this transaction is a historic moment for our business, as we expand to 51 countries and increase our revenues to €7.3bn globally [FY23 pro forma]. Hitachi Rail’s greater global reach and accelerated innovation is the start of an exciting new chapter that will deliver enhanced value and growth in new markets.

With Thales’ Ground Transportation Systems team on board, we can better deliver the sustainable mobility transition for the world’s best transport companies. Bringing our teams together sees our engineering capacity nearly double and means faster innovation and more advanced technology-led solutions for our customers.

Giuseppe Marino, Group CEO of Hitachi Rail