PARIS (Reuters) – Thales, Europe’s largest defence electronics company, confirmed on Wednesday it was in advanced talks to sell its railway signalling business to Japan’s Hitachi in a deal that values the division at 1.66 billion euros ($2 billion).
The sale comes as the French firm looks to streamline its sprawling operations and reassure investors of its focus on the core business of making high-tech equipment for the defence and aerospace industries.
Reuters reported the talks last week.
It reflects a multiple of 13.8 times of the unit’s twelve-month earnings before interest and taxes (EBIT), Thales said in a statement, adding that it expected the deal to close by the end of 2022 or the start of 2023.
The sale comes at a time of consolidation in the industry as independent players align themselves with bigger industrial groups.
In January, French train maker Alstom closed its 5.5-billion-euro acquisition of Bombardier’s rail business, making it the industry’s No. 2 worldwide, after China’s CRRC.
(Reporting by Gwenaelle Barzic, Sudip Kar-Gupta and Mathieu Rosemain; Editing by Tom Hogue and Clarence Fernandez)