Siemens has agreed to buy the rail signalling division of Invensys Rail, the rail automation business of UK-based Invensys, for £1.7bn to expand its presence in the global rail automation market.
Invensys Rail generated revenues of about £800m in the last financial year, ending March 2012.
The transaction, which is subject to regulatory approval and endorsement by Invensys shareholders, is expected to be completed in the second quarter of 2013.
Siemens rail automation business CEO Juergen Brandes said: "The combination of the regional activities, portfolios and customer offerings of Invensys Rail and Siemens will ensure profitable growth opportunities worldwide."
Invensys Rail has carried out contracts for customers in the UK, Spain, the US and Australia, and in recent years has also expanded its business into emerging regions.
Following the acquisition, Invensys Rail will be integrated into Siemens’ rail automation business in the Mobility and Logistics Division of the Infrastructure and Cities Sector.
The combined product portfolio will provide a range of automation and optimisation products, solutions and services, as well as cover all customer segments.
The deal will also strengthen the Siemens rail automation business by combining the communication-based train control (CBTC) solutions of both companies, said Siemens.
Headquartered in Berlin, Siemens’ rail automation business has around 6,500 employees and an annual turnover of €1.4bn.
Invensys will use £400m from the sale proceeds to pay off its pension deficit.
Image: The acquisition of Invensys Rail by Siemens is expected to be completed in the second quarter of 2013. Photo: courtesy of Siemens AG.