TOKYO -- Japanese industrial conglomerate Hitachi will buy European defense electronics company Thales’ railway signaling business for 1.66 billion euros ($1.97 billion), the company said Wednesday.

Thales’ Ground Transportation Systems operates rail signaling, train-control and fare-collection systems. The unit has about 9,000 employees in 42 countries and generated 1.6 billion euros in revenue in fiscal 2020.

Through the purchase, Hitachi hopes to expand digitization in the rail sector and increase its railway business revenue to 1 trillion yen ($9.17 billion) by fiscal 2026, the company said in a news release.