SINGAPORE - Home-grown engineering and aerospace giant ST Engineering has bought US-based transportation technology company TransCore Partners and TLP Holdings (collectively TransCore) for US$2.68 billion (S$3.63 billion).
The purchase from Roper Technologies, a Fortune 500 company, is the biggest ever investment made by the mainboard-listed company and represents a move by ST Engineering to become a major global player in next-generation smart city and smart mobility solutions.
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 in rail and road.
TransCore has an 80-year track record in the North American transportation industry.
It provides innovative technical solutions and engineering services for applications encompassing next-generation electronic toll collection, congestion pricing, intelligent transportation systems, back office solutions and radio-frequency identification (RFID) products.
The company is contracted to deliver a congestion pricing project in Manhattan, New York, the first ever in the United States. 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 (C3) as well as enterprise asset management, automatic fare collection, platform screen door and passenger information systems. These solutions have been deployed in more than 48 cities worldwide.
ST Engineering has over 60 intelligent road transport projects in cities around the world. These include intelligent traffic management systems, as well as fleet management systems for taxis and buses, car park management systems and advanced transportation 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. This acquisition demonstrates our continued commitment to create long-term value for our shareholders through sustainable global growth," he said.
TransCore's revenue as at end-December 2020 was some US$565 million, while its Ebitda (earnings before interest, tax, depreciation and amortisation) was US$143 million. It had an orderbook of US$1.2 billion at the end of July.
The purchase price values TransCore at EV (enterprise value)-to-EBITDA multiple of 16.2 times.
ST Engineering said the deal would be cashflow positive within the first year and earnings accretive in the second year. It added that the acquisition will not impact its ability to pay dividends.
The acquisition is expected to be completed by the first quarter of 2022.
ST Engineering is a global technology, defence and engineering group. Its global network of subsidiaries and associated companies spans Asia, Europe, the Middle East and the US.
Aerospace engineering is its biggest business unit and it is the world's largest airframe maintenance, repair, and operations (MRO) company. It is also one of the few companies with in-house engineering design and development capabilities. In the US alone, it has major operations in 16 cities and across 12 states and employs about 5,000 people.
ST Engineering closed three cents down at $3.78 on Friday (Oct 1).