Thales poised to sell signalling unit to Hitachi for about $2 bln

French firm Thales (TCFP.PA) is in advanced negotiations to sell its railway signalling business to Japan’s Hitachi (6501.T) for nearly 1.7 billion euros ($2 billion), a source familiar with the discussions said.

A representative of Hitachi’s European operations did not immediately respond to requests for comment.

The source, who spoke on condition of anonymity, said the deal was scheduled to be announced within the next few days.

Thales put its signalling business up for sale earlier this year.

The sale is part of a drive by the French firm to streamline its sprawling operations and reassure investors it is focused on its core business of making high-tech equipment for the defence and aerospace industries.

The signalling unit is small compared with competitors, and the sale comes at a time of consolidation in the industry when independent players are aligning themselves with bigger industrial groups.

Thales had shortlisted three bidders for the unit: Hitachi Rail, Switzerland’s Stadler Rail (SRAIL.S) and Spain’s CAF (CAF.MC).

Thales was advised on the sale by Lazard, while Hitachi’s advisors were Perella Weinberg Partners and Deutsche Bank, according to the source familiar with the discussions.

($1 = 0.8427 euros)