Hitachi Rail is set to enter exclusive negotiations to acquire French company Thales’ Ground Transportation Systems (GTS) Global Business Unit for around $2bn (€1.66bn).

GTS provides rail signalling and train control systems, telecommunications and supervision systems, fare collection solutions, and other key technologies.

The deal is expected to create a ‘leading’ rail signalling provider, with an expanded product portfolio and enhanced capabilities to fulfil the demands of the clients.

It will provide better professional opportunities to GTS’ employees.

Furthermore, the combination will aid Hitachi Rail to push its Mobility as a Service (MaaS) offering.

In April this year, Thales reportedly planned to put up its rail signalling business for sale for $1.8bn or more.

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Hitachi Rail CEO Andrew Barr said: “Today’s announcement marks an exciting opportunity for the teams at Hitachi Rail and Thales’s Ground Transportations Systems business to create new value for our customers, cities and passengers around the world.

“Not only will we grow the reach of our core signaling capabilities as part of our turnkey offering, but we are also bringing together our digital and MaaS capabilities.”

Thales stated that the final purchase price for the unit will be determined after customary adjustments for net working capital, as well as net debt based on actual amounts at the closing date.

In addition, the deal will be discussed with the employee representatives of both the firms in accordance with the laws of involved countries, including the regulatory and antitrust clearances.

The transaction is expected to conclude by the end of 2022 or early 2023.

Thales Strategy, Research & Technology executive vice-president Philippe Keryer said: “After discussions with key market players, Thales has selected the best industrial partner to ensure a successful long-term development of its ground transportation business.”