UK's Competition and Markets Authority or CMA on Wednesday said that Hitachi, Ltd.'s (HTHIF.PK,HTHIY.PK) proposed 1.7 billion euros purchase of Thales SA's (THLEF.PK) Ground Transportation business or Thales GTS raises competition concerns. The Japanese conglomerate is selling part of its existing mainline signalling business to an independent purchaser as required by the regulator to proceed with the planned acquisition.
In Japan, Hitachi shares were losing more than 4 percent.
Hitachi has offered to sell its existing mainline signalling business in the United Kingdom, France, and Germany.
In a statement, the CMA said its independent Inquiry Group concluded, following an in-depth investigation, that the merger would give rise to competition concerns regarding the supply of digital mainline signalling systems which are being used increasingly on the country's main railway networks.
According to the regulator, Hitachi Rail and Thales GTS are both global suppliers of signalling systems for mainline and urban railway networks. Such systems are a core part of railway infrastructure, helping to maintain passenger safety by controlling the movement of trains and maximising capacity on railway networks.
Both Thales and Hitachi are well placed to supply these systems and that, should the merger go ahead, few credible competitors would remain, the CMA said.
Meanwhile, the company no longer has competition concerns regarding the supply of Communications Based Train Control or CBTC signalling systems which are used on urban rail networks, such as the London Underground.
In Japan, Hitachi shares were trading at 8,677 yen, down 4.39 percent.
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