Thu, 29 Nov 2012 | DIVISION SALE
Invensys has announced the sale of its rail signalling division in a move that has shocked the City.
The business has revealed plans to sell its rail signalling division to German company Siemens in a deal worth £1.47 billion.
The price has set traders talking because it is just £50 million short of the entire company's worth. In response to the announcement, shares in Invensys soared by 27 per cent.
Alongside the sale to Siemens, Invensys will hand £625 million back to shareholders and a further £625 million to its own pension fund.
However, the sale isn't yet secured and counterbids are expected to hit the market. A senior London-based investment banker, who has knowledge of the company, told the Telegraph: “Invensys is definitely in play now. I'd expect to see someone make an offer for the rail business before the shareholder vote on the deal, and I certainly wouldn't be surprised if they got some bids for the remaining parts of the business.”
Invensys is seen by many as a British success story and is one of the world's leading developers of signalling technology, with its systems in use around the globe. In fact, last year the firm was awarded the contract to build the signalling systems for a new railway running between Mecca and Medina in Saudi Arabia.
It is inevitable that the sale of such a large company will hit headlines due to its impact on the markets. But there is also movement at the lower end of the rail infrastructure M&A market, including the sale of a specialist construction business based in London that primarily operates to service the London Underground, as well as a number of other national companies that deliver construction services to the railways.
An established manufacturer of rail industry products and sub-contract sheet metal processing company with a turnover of £5.5 million is also on the market at the moment.
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