German company Knorr-Bremse has agreed to acquire Switzerland-headquartered railway electronics provider Duagon Group for about €500m ($586m).
Through this acquisition, Knorr-Bremse aims to expand its business in electronic and software solutions for rail vehicles. It expects to add capabilities relevant to braking and entrance systems.
A purchase agreement has been signed between Knorr-Bremse and DBAG Fund VII, a private equity fund advised by Deutsche Beteiligungs (DBAG).
The agreed purchase price also includes the possibility of an additional earn-out if certain targets are met. The completion of the transaction depends on receiving standard regulatory approvals.
Duagon was founded in 1995 and employs around 750 people across eight countries. The company supplies its products and services to vehicle manufacturers, systems integrators and infrastructure companies in the rail sector.
Knorr-Bremse said Duagon’s products and expertise will add to the operations of its business units, Selectron and KB Signaling.
Duagon's CEO Dr Michael Goldbach said: “With Knorr-Bremse, Duagon gains a partner with whom we will strengthen and rapidly expand our position as a leading embedded electronics supplier in the rail market.
“We look forward to benefitting from Knorr-Bremse’s strengths and expertise, leveraging them in all business segments, and bringing our complementary expertise to the world of Knorr-Bremse.”
Knorr-Bremse intends to integrate duagon’s embedded electronics offerings into its portfolio to create “more uniform” electronics platforms across product groups.
The German company expects the integration to improve research and development cost efficiency and overall competitiveness.
The company cited increasing digitalisation of trains and rail networks as driving demand for electronic and software-based solutions, including remote monitoring and remote diagnostics.
Knorr-Bremse CEO Marc Llistosella said: “Our acquisition of Duagon, a successful electronics supplier, demonstrates once again that we are strengthening our rail business, which will drive up profitable growth.
“More particularly, we are honing our technological expertise in the key areas railway electronics and rail signalling technology and are increasing the high-margin share of revenue in rail vehicles.”
In September this year, Knorr-Bremse won a contract with Indian rail and metro coach manufacturer BEML to supply system technologies for India's first high-speed trains.
