PARIS, April 22 (Reuters) - Thales is putting its
rail signalling business up for sale in a potential deal worth
1.5 billion euros or more ($1.8 billion) as the French defence
and aerospace group seeks to streamline operations, people close
to the matter said.
Thales, partially owned by the French state, makes equipment
ranging from anti-jamming devices for fighter jets to airliner
navigation beacons, and investors have often questioned the
diversity of its portfolio of assets.
Proceeds from the divestiture would help bolster Thales'
finances after the COVID-19 crisis dented sales and profits last
Thales is working with Lazard on the divestiture and
is expected to shortly send out information packages to
potential buyers including Alstom, Hitachi Rail
, Stadler Rail, Spain's CAF and
private equity groups, they said.
Thales and Lazard declined to comment.
Siemens is unlikely to bid for the unit due to
likely antitrust issues it would face if it tried to buy the
unit, the people said. Alstom, which earlier this year completed
the acquisition of Bombardier's rail business, may
face similar problems, they added.
The signalling business sits in Thales' transport division,
which also supplies fare collection systems and cybersecurity
solutions for railway infrastructure.
The transport unit last year saw order intake shrink by 6%
to 1.6 billion euros as customers delayed rail projects on weak
demand during the pandemic. Its EBIT margin improved to 5.3% on
cost cuts but still fell short of an 8% target.
JP Morgan analysts said last month that the unit seemed on
track. "The H2 2020 margin of 9.1% was encouraging and
management seem confident that Transport can achieve high-single
digit margins over a full 12 month period, something that hasn't
happened since 2013", the bank said in a note to clients.
The unit is small compared to competitors and its margin is
lower than that of other Thales businesses and rivals.
While Thales has finished putting together a so-called
vendor due diligence on its signalling business, prospective
buyers will only be able to make their own assessments on the
unit at a later stage, the sources said.
Valuation estimates range from 1.5-2.5 billion euros due to
the unclear stage of its restructuring and future growth
($1 = 0.8303 euros)
(Editing by Kirsten Donovan)