Thales: Hitachi deal weakens competition
(CercleFinance.com) - The UK Competition Authority said on Thursday that Hitachi Rail's proposed acquisition of Thales' rail signalling business was likely to result in reduced competition.
Following its investigation, the Competition and Markets Authority (CMA) determined that the deal, valued at E1.7bn, was likely to reduce competition in the mainline and urban rail signalling market.
If the merger were to go ahead, there would be fewer credible bidders for mainline digital signalling, which could increase Network Rail's costs and have a negative impact on the digitisation of the UK rail network, it said.
Following these conclusions, the CMA is now planning to organise consultations to consider potential corrective measures to ensure that competition is protected in the market.
Such remedies could range from requiring Hitachi or Thales to divest certain of their businesses to blocking the proposed combination altogether, it said.
Thales shares were down over 1% following these announcements, underperforming a Paris market that was hovering around equilibrium.
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