UPDATE: ST Engineering to acquire TransCore from Roper Technologies for US$2.68B

U.S. one-dollar currency notes; taken September 2018.U.S. one dollar bills.

This item was originally published on Sunday, 3 October 2021 at 13:39 SGT; it has since been updated to include more details.

ST Engineering has entered a deal to acquire TransCore Partners and TLP Holdings from a wholly owned subsidiary of U.S.-listed Roper Technologies for US$2.68 billion, or around S$3.62 billion, in cash, the Singapore-listed aerospace and defense contractor said in a filing to SGX Sunday.

The deal is aimed at accelerating ST Engineering’s Smart City business, particularly in Smart Mobility, leveraging on TransCore’s transportation expertise in North American markets, the filing said.

“The Smart City space has been an important strategic focus area for 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, underpinned by our strengths in technology and innovation,” Vincent Chong, group president and CEO of ST Engineering, said in the statement.

TransCore provides innovative technical and engineering services, including next-generation electronic toll collections, congestion pricing, Intelligent Transportation Systems (ITS), back-office solutions and RFID products, the filing said. TransCore is currently under contract to deliver the U.S.’s first ever congestion pricing system in Manhattan in New York City, the filing said.

ST Engineering said the deal’s rationale included:

  • Enhancing its Smart Mobility offerings: TransCore’s electronic toll collection, congestion pricing and ITS services are “highly complementary” with ST Engineering’s offerings. The North American electronic toll collection and ITS markets are expected to grow to more than US$4 million in 2030 from US$2.5 billion in 2021, ST Engineering said, citing data from PTOLEMUS Consulting Group.
  • Smart City services: The combined businesses will focus on next-bound transportation technologies, ST Engineering said.
  • Sustainability: TransCore’s transportation services are aimed at reducing traffic congestion and lowering vehicle emissions, aligned with ST Engineering’s offerings to help cities deal with urbanisation and climate change, the filing said.
  • Cross-selling: TransCore’s offerings in electronic toll collection and congestion pricing in North America would be a new business for ST Engineering, allowing for cross-selling ST Engineering’s current ITS services, such as smart road junctions and road traffic optimisation systems, to the North American market, the filing said. At the same time, TransCore’s electronic toll collections and congestion pricing services can be offered to Southeast Asian customers, where ST Engineering has a strong presence, the filing said.

The acquisition will be funded by internal cash and the issuance of debt securities, ST Engineering said.

The transaction is subject to the approval of ST Engineering’s shareholders. Temasek Holdings and its indirect wholly owned subsidiary Vestal, which hold 49.89 percent and 0.91 percent of ST Engineering’s shares, respectively, have agreed to vote in favor of the deal, the filing said.

The deal is also conditional on receiving U.S. antitrust regulators’ approval as well as approval from the Committee on Foreign Investment in the United States (CFIUS) and certain pre-sale restructuring steps, the filing said.

For 2020, TransCore reported US$565 million in revenue and US$143 million in earnings before interest, tax, depreciation and amortisation (ebitda).

ST Engineering said the deal is expected to be cash-flow positive from the first year of completion and earnings accretive from the second year.