German diversified industrial titan Siemens AG has announced it is purchasing Invensys Rail, the rail signaling business of the British engineering and technology company Invensys. Shelling out $2.8 billion for the purchase, Siemens plans to enhance its market share in the rail automation sector, while Invensys said it would return £625 million ($1 billion) from the deal to investors.
The transaction is expected to close in the second quarter of 2013, when Invensys Rail will be integrated with Siemens Infrastructure & Cities, the German giant’s operations that build, design, and offer maintenance on rail systems, metropolitan centers, and urban infrastructures.
When you are a conglomerate maintaining a massive global presence, it is essential to operate through a targeted and focused operating structure. Siemens adhered to this notion in 2011 when it reorganized into several chief segments: the aforementioned Siemens Infrastructure & Cities, Siemens Energy, Siemens Healthcare, Siemens Industry, and Siemens Financial Services.
In addition to buying Invensys Rail, Siemens is divesting its baggage handling and postal and parcel sorting operations as part of its “Siemens 2014″ company program, an initiative aimed at fortifying these core operating segments and reducing costs. Siemens has also agreed to spin off its Osram lighting business (within Siemens Industry) as the demand for traditional light bulbs continues to diminish. (Osram is the #2 player in the lighting industry after Royal Philips Electronics.) Siemens Industry restructured even further in 2011 when it sold its IT Solutions and Services unit to France-based Atos for approximately €850 million (more than $1 billion).