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Hitachi Offers Asset Sale to EU for Thales Acquisition Approval

 |  September 17, 2023

Hitachi has proposed the sale of assets in France and Germany, along with its fundamental train control technology, in an effort to secure approval from the European Union (EU) regarding its 1.7 billion euro ($1.8 billion) acquisition of Thales’ railway signaling business, according to a report from Reuters.

The Japanese conglomerate submitted this proposal to the European Commission on the same day it sought EU clearance for the transaction, as revealed in an EU regulatory filing released on Friday.

These remedies closely resemble those presented to the UK Competition and Markets Authority (CMA) back in June. They entail the divestment of Hitachi’s mainline signaling operations in the UK, France, and Germany, as well as its core communication-based train control technology, to a competing entity. At the time, Hitachi asserted that this package constituted all the necessary components for a viable, independent business.

The EU’s competition regulatory body, which has set a deadline for its decision on November 6, has not disclosed the specifics of these remedies, consistent with its policy. It is anticipated that the EU authorities will solicit feedback from Hitachi’s customers and competitors before making a final determination on whether to accept the proposed remedies or request additional concessions.

Related: UK Watchdog Says Hitachi-Thales Rail Signal Deal Could Reduce Competition

The fact that Hitachi submitted these remedies simultaneously with its formal application for approval suggests that the company may have received positive signals indicating that these measures could be sufficient to obtain EU clearance.

Notably, Hitachi had previously sought EU approval in October of the previous year but subsequently withdrew its application a month later.

This deal highlights the ongoing consolidation in the rail industry, with smaller, independent players partnering with larger industrial groups.

The Competition and Markets Authority (CMA) had narrowed its concerns about the deal in August, stating that it would not significantly reduce competition in the supply of communication-based train control signaling systems in the UK. A final report from the CMA is expected by October 6. Earlier, the CMA had cautioned that the merger between two prominent providers of signaling systems for both mainline and urban railway networks could potentially raise the costs associated with upgrading the UK’s rail infrastructure.

Source: Reuters