In a move to become a major global player in next-generation smart city and smart mobility solutions, home-grown engineering and aerospace giant ST Engineering has bought United States-based transport technology company TransCore Partners and TLP Holdings (collectively TransCore) for US$2.68 billion (S$3.64 billion).
The purchase from Roper Technologies, a Fortune 500 company, is the biggest investment made by the mainboard-listed company.
The acquisition - funded by cash and the issuance of debt securities - is expected to give ST Engineering new capabilities and expertise in smart city solutions, particularly for rail and road.
TransCore has an 80-year track record in the North American transport industry.
It provides innovative technical solutions and engineering services for applications encompassing next-generation electronic toll collection, congestion pricing, intelligent transport systems, back-office solutions and radio-frequency identification products.
The company is contracted to deliver a congestion pricing project in Manhattan, the first in the US. Congestion pricing adds a surcharge for services that are subject to temporary or cyclical increases in demand.
ST Engineering itself has a strong track record in smart mobility (rail/MRT and road) solutions.
Its suite of rail electronics solutions includes the Smart Metro Control Centre; command, control and communications, or C3; as well as enterprise asset management, automatic fare collection, platform screen door and passenger information systems. These have been deployed in more than 48 cities worldwide.
ST Engineering also has more than 60 intelligent road transport projects in cities around the world. These include intelligent traffic management systems, fleet management systems for taxis and buses, carpark management systems and advanced transport operations centres.
The Singapore company sees TransCore opening up a new segment in electronic toll systems and congestion pricing.
"The smart city space has been an important strategic focus area for ST Engineering," said Mr Vincent Chong, group president and chief executive of ST Engineering.
"TransCore is a strong strategic fit for us and its road transportation solutions will complement and enhance our suite of smart mobility rail and road solutions. With this acquisition, we will be uniquely positioned as a smart mobility market leader," he said. "This acquisition demonstrates our continued commitment to create long-term value for our shareholders through sustainable global growth."
TransCore's revenue as at end-December last year was about US$565 million, while its Ebitda (earnings before interest, tax, depreciation and amortisation) was US$143 million. It had an order book of US$1.2 billion at the end of July.
The purchase price values TransCore at an enterprise value-to-Ebitda multiple of 16.2 times.
ST Engineering said the deal would be cash flow-positive within the first year and earnings accretive in the second year. It added that the acquisition will not affect its ability to pay dividends.
The acquisition is expected to be completed by the first quarter of next year.
ST Engineering is a global technology, defence and engineering group. Aerospace engineering is its biggest business unit and it is the world's largest airframe maintenance, repair and operations company.
ST Engineering closed three cents down at $3.78 last Friday.