ALSTOM, SIEMENS TO MERGE RAIL OPS
Rivals seeking to create European champion to challenge China’s CRRC
GERMAN industrial group Siemens AG and French rival Alstom SA agreed to merge their rail operations, creating a European champion to better withstand the international advance of China’s state-owned CRRC Corp Ltd.
Siemens will own 50 per cent plus a few shares of the joint venture, to be called Siemens Alstom, while Alstom will supply Henri Poupart-Lafarge as chief executive, helping to counter criticism that France is giving up control of another national industrial icon.
The non-executive chairman will come from Siemens.
The framework deal, which still has to be approved by Alstom shareholders as well as regulators, is a Franco-German industrial breakthrough for French President Emmanuel Macron, but is a move that has riled opposition politicians.
Their worries centre on France losing control of its TGV highspeed train — a symbol of national pride that has highlighted French engineering skill — and possible job losses.
Finance Minister Bruno Le Maire said on Tuesday the French government welcomed the planned tie-up, which he said would protect French jobs.
The French state said it would not exercise an option to buy a 20 per cent stake in Alstom from industrial group Bouygues SA.
The Siemens and Alstom transport businesses span the iconic French TGV and German ICE high-speed trains as well as signalling and rail technology. They have combined sales of €15.3 billion (RM75.96 billion) and earnings before interest and tax of €1.2 billion.
Analysts at Deutsche Bank kept a “hold” rating on Alstom shares, saying extracting cost savings from the deal could be tricky.
The deal leaves out in the cold Canadian transportation group Bombardier Inc, which also held talks with Siemens, sources have said, and which faces a separate battle this week to protect jobs in Quebec and Northern Ireland.
China’s CRRC, with annual revenue of about US$35 billion (RM147.7 billion), is bigger than Siemens Mobility, the rail and infrastructure division of the German conglomerate, Alstom and Bombardier Transportation combined.
Previously focused on China, it has won projects in Britain and the Czech Republic in the past year, and is eyeing the United Kingdom’s High Speed 2 project, which will connect London with cities in the north of England. Reuters