Siemens has entered into an agreement to acquire Invensys Rail, the rail automation business of Invensys for approximately €2.2 billion (US$2.9 billion).
The transaction is part of its recently launched “Siemens 2014” company program, which amongst others, is aimed at strengthening the company’s core activities. The acquisition will expand Siemens’ presence in the growing global rail automation market.
“Today’s moves are important measures to focus our core activities. We are exiting a non-core business with limited synergy potential while strengthening a resilient and high return business by combining two organizations with similar cultures and attractive synergy potential. The combined business will ensure profitable growth opportunities worldwide for the Siemens Infrastructure and Cities Sector,” said Roland Busch, CEO of Siemens Infrastructure and Cities.
“With the addition of Invensys Rail, we are in an excellent position to offer best-in-class solutions and technology to rail operators worldwide. The combination of two excellent organizations will create a truly global player in the Rail Automation business,” said Sami Atiya, CEO of Siemens’ Mobility and Logistics Division.
Significant synergy potential is expected from the combination of territories and technologies together with cost savings in procurement, portfolio, engineering and SG&A. Synergies of over €100 million (US$130 million) are expected, to be fully achieved by 2018.
The transaction is subject to Invensys shareholder approval, which is expected to be voted on at a general meeting planned for December 2012. Furthermore, consent by Invensys’ lenders, the UK pension regulator and anti-trust authorities is required. Siemens expects the transaction to close in the second quarter of calendar year 2013.