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Knorr-Bremse Takes on North American CCS Market with Alstom Signaling Purchase

Knorr-Bremse Takes on North American CCS Market with Alstom Signaling Purchase
photo: Knorr-Bremse / Public domain/Knorr-Bremse
23 / 04 / 2024

Knorr-Bremse AG has announced its acquisition of the conventional rail signaling technology business of Alstom Signaling North America.

With this acquisition, Knorr-Bremse is successfully making an entry into the highly attractive control, command, and signaling (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 the summer of 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 signaling 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 signaling 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.

Source: Knorr-Bremse Press Releases