Hitachi Rail has refiled its merger notification with the European Commission, formally restarting the merger clearance process for the acquisition of Thales's Ground Transportation Systems (GTS) in the European Union.
The proposed €1.66 billion deal was first announced in August 2021, and Hitachi Rail has since secured regulatory approval in 11 of the 13 required jurisdictions. However, the European Commission raised concerns over the potential impact of the merger on competition for mainline signalling projects in France and Germany, and Hitachi Rail withdrew its EU filing in November 2022.
To address the Commission's concerns, Hitachi Rail has proposed to divest portions of its own signalling business. In a statement, a Hitachi Rail spokesperson said: "We are delighted to be in a position to refile for clearance in the EU after working extensively with the Commission on a proposed divestment package which we are satisfied will address their concerns."
Hitachi Rail also expects to receive a decision on the proposed transaction from the UK Competition and Markets Authority (CMA) shortly, with a decision due on October 6.
In its initial assessment in August, the CMA said that it did not believe the possible merger would have a detrimental effect on the signalling market within the UK. This was despite initial concerns that it could reduce the options within the sector..
The CMA concluded that Transport for London (TfL) who was the primary client of both Thales and Hitachi Rail would be pushing back many of its resignalling projects until at least 2030. This meant that Hitachi Rail, who have less experience in the industry would not be able to demonstrate its capabilities in highly complex projects.
If approved, the merger would create one of the world's largest rail signalling companies, with a combined turnover of over €5 billion. Hitachi Rail is a global leader in the development and manufacture of rail rolling stock, while Thales GTS is a leader in rail signalling and control systems.
Photo Credit: Hitachi Rail