Siemens has entered into an agreement to acquire Invensys Rail, the rail automation business of Invensys for approximately €2.2 billion ($2.8 billion). At the same time, the company plans to divest its baggage handling, postal and parcel sorting activities. Both planned transactions are part of the recently launched "Siemens 2014" company program, which among others, is aimed at strengthening the company's core activities. With revenues of approximately £800 million, Invensys Rail is a software-based rail signaling and control company. The acquisition will expand Siemens' presence in the growing global rail automation market. "Today's moves are important measures to focus our core activities. We are exiting a non-core business with limited synergy potential while strengthening a resilient and high-return business by combining two organizations with similar cultures and attractive synergy potential. The combined business will ensure profitable growth opportunities worldwide for the Siemens Infrastructure & Cities Sector," said Roland Busch, CEO of Siemens Infrastructure & Cities. On the Invensys side, the deal will provide a long-term solution to the company’s issues with the U.K. Pension Scheme by providing an up-front payment of £400 million and an additional payment of £225 to a trust. The deal should also bring £625 million in cash to shareholders. The divestiture also will allow Invensys to focus on its industrial software, systems and control equipment business. Wayne Edmonds, the chief executive of Invensys said, "This transaction creates a more focused industrial software, systems and control equipment Group with a significant exposure to higher growth and higher margin segments and the resources to invest in them. It also allows us to make substantial cost savings through a simplified organizational structure."Invensys' automation businesses include Invensys Operations Management, including Wonderware, SimSci-Esscor, Avantis, Skelta, Foxboro and Triconex. The deal is subject to EU regulatory and Invensys stockholder approval and is expected to be completed in the second quarter of 2013.
