Knorr-Bremse Acquires Alstom’s Rail Signalling

Knorr-Bremse Acquires Alstom’s Rail Signalling

  • Knorr-Bremse is strengthening especially its resilient rail business
  • The acquisition is accretive from the beginning 
  • By acquiring one of the market leaders in North America, Knorr-Bremse is  increasing its overall revenue share in the aftermarket business and the region   
  • By entering the global rail control, command, and signalling (CCS) technology  market, the total addressable rail market volume for Knorr-Bremse will increase  by up to € 20 billion in the medium term
  • Acquisition underscores the clear plan for implementing the Group-wide  “BOOST 2026” strategy program 
  • Transaction expected to close during summer 2024

Knorr-Bremse AG, the global market leader for braking systems  and a leading provider of other rail and commercial vehicle systems, today announced its  acquisition of the conventional rail signalling technology business of Alstom Signaling North  America. With this acquisition, Knorr-Bremse is successfully making an entry into the highly  attractive control, command, and signalling (CCS) segment of the rail market. Alstom  Signaling is a leading company in North America’s CCS market. For the Knorr-Bremse Rail  Vehicle Systems division, the acquisition of this profitable business creates new prospects  for profitable growth, technological competence, and future digital business models. The  transaction is expected to close during summer 2024. 

Marc Llistosella, Chief Executive Officer of Knorr-Bremse AG: “This acquisition is good  for Knorr-Bremse and will drive our profitable growth further. With it, we are not just building  on our highly profitable rail business. Rather, we will also become one of the US market  leaders in North America in the rail control, command, and signalling segment, or CCS for  short. The transaction pursues a compelling industrial logic and is a very good match for our  development and growth path, as we announced in our ‘BOOST 2026’ strategy program. We  at Knorr-Bremse are putting our plans into action. We are delighted that we will soon welcome  new colleagues to the Knorr-Bremse team, too.” 

The acquisition is a significant step in the transformation from a supplier of vehicle systems  to a supplier of systems for the entire rail ecosystem, explains Dr. Nicolas Lange, member  of the Knorr-Bremse AG Executive Board and responsible for the Rail Vehicle Systems  division: “For Knorr-Bremse, the acquisition of Alstom Signaling North America means a  successful entry to the CCS segment. The CCS market is of approximately € 20 billion 

globally, making it a highly attractive rail segment. For us as an international systems supplier, the transaction is a substantial step forward in electronics and digitalization in rail  infrastructure. Brakes and signalling technology have a critical influence on the safety and  capacity of rail transportation. The CCS segment fits into the DNA of the Knorr-Bremse Rail  division amazingly.”

From today’s perspective, it is believed that the acquisition will be accretive right from the  outset. The appeal of the CCS market comes from the market entry barriers, resulting from  local approval and technology standards; a focus on safety in operation and availability, and  large and continuous shares of the aftermarket. Knorr-Bremse has been intimately familiar  with this market-specific environment for decades. This will be significant support for the  integration of the company and future business development. 

Alstom Signaling North America by far has the largest installed base of signal box technology,  train detection, and rail crossings, especially in the freight segment, as well as a very large  share of the aftermarket. In the future, Knorr-Bremse will be able to offer a CCS technology  platform to operators and system providers in North America under one roof. Simultaneously,  the acquisition strengthens the position of the Rail Vehicle Systems division in the  digitalization business thanks to the access to a large volume of infrastructure data that can  be provided to operators as a data service or “software as a service.”  

A purchase price of around EUR 630 million was agreed. This includes a mid-double-digit  million EUR amount for additional expected and highly profitable project business, which  should support the revenue growth mid-term. Alstom Signaling North America attained  revenues of about EUR 300 million and an EBIT margin of approximately 16% according to  the preliminary results in the past fiscal year which ended on March 31, 2024. The acquisition  is to be financed from available liquidity and debt and should not affect the credit rating. 

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