Siemens and Bombardier vie for control of venture
Talks about uniting the rail operations of Germany’s Siemens and Canada’s Bombardier were being complicated by the desire of the companies to keep control of a merged business, two people close to the matter said.
Antitrust issues and political considerations could also ultimately make a deal to create a company with combined sales of $16bn hard to pull off, industry experts said.
The two groups are talking about a joint venture that could compete better with Chinese state-backed market leader CRRC, which is expanding aggressively abroad and would still be twice their combined size by revenue.
“It could go fast, it could be very drawn out or it could fail. It’s completely open,” one of the people said.
The three main rivals to CRRC — Bombardier, Siemens and France’s Alstom — have talked about combining their businesses in various arrangements over the past years.
A Bombardier-Siemens combination could run into antitrust issues as it did last time it surfaced, with significant overlap particularly in Germany.
In a global context the arrival of CRRC had however changed the shape of the industry and Europe should be interested in creating a strong competitor to the emerging Chinese challenge, the person said.
However, antitrust experts doubt that watchdogs will give the deal the green light without imposing conditions that could make it unviable.
JOBS FEAR
Any transaction also runs the risk of resistance from trade unions. One of the sources said German unions were expected to support the deal as long as Siemens was in control. German trade union IG Metall declined to comment on the matter.
But given the Bombardier founding family’s influence on the company — they control the company through a dual class share structure — it is doubtful that Bombardier would agree to relinquish control to Siemens.
One of the sources also said the German chancellery was involved, without giving details. Another complication is that Canadian pension fund Caisse de depot et placement du Quebec owns 30% of Bombardier’s train business.
A BOMBARDIER-SIEMENS COMBINATION COULD RUN INTO ANTITRUST ISSUES AS IT DID LAST TIME IT SURFACED