Siemens has acquired British engineering firm Invensys Rail for £1.74 billion.
Invensys’ shares were up 27 per cent at end of trading yesterday (November 29) as news of the takeover was announced.
Siemens believes the move will generate growth in new regions and allow the German technology giant to provide a wider range of signalling and control systems.
This year, Invensys, whose customers include London Underground, MTR and CSR, generated revenues of around £800 million, with an order book worth £1.2 billion.
“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 organisations with similar cultures and attractive synergy potential.
“The combined business will ensure profitable growth opportunities worldwide for the Siemens Infrastructure & Cities Sector,” said Roland Busch, chief executive of Siemens Infrastructure & Cities.
Speaking during a press conference, Busch said the combined territories and technology could generate synergies of more than 100 million euros by 2018.
“With the addition of Invensys Rail we are in an excellent position to offer best-in-class solutions and technology to rail operators worldwide,” said Sami Atiya, chief executive of Siemens’ Mobility and Logistics Division.
“The combination of two excellent organisations will create a truly global player in the rail automation business.”
The deal will give Siemens access to Invensys customers in the UK, Spain, the U.S. and Australia, allowing the company to build on existing presence in Germany, Austria and Switzerland.
Siemens has said that employees from both companies will form the new management team and pledged to retain Invensys Rail’s “local expertise and relationships”.
The transaction is subject to Invensys’ shareholder approval and regulatory clearances.
Wayne Edmunds, chief executive of Invensys, said: “Following a strategic review which highlighted the likely consolidation in the global rail signalling market and the limited scope to increase the size of the Invensys Rail business, we have decided to refocus the group around our industrial software, systems and control equipment business and, accordingly, to dispose of Invensys Rail.
“As well as providing Shareholders with an immediate cash return, this transaction enables the group to create a long-term pension solution and therefore increased financial flexibility going forward.”
I wonder whether the current workforce at Invensys Rail will get anything out of this takeover. Sadly, I cannot imagine Siemens agreeing to re-locate it’s major European signalling design/manufacture, to Chippenham or anywhere else in the UK. What is more likely to happen will be that some Invensys plants will close and all design work will shift to Germany. However, I might be wrong but we shall see in due course.