France wary of Siemens-Alstom deal

French politicians voiced concerns on Tuesday that a planned multibillion-dollar merger of the rail assets of Alstom and Siemens could give the German company the upper hand.

Two sources familiar with the matter said the French company planned to pay shareholders a special dividend if the deal went through.

Siemens would opt for a deal with Alstom rather than an alternative with Canada’s Bombardier, two sources said.

Siemens Mobility is set to be merged into Alstom, in which Siemens would hold 50% plus one share, while the CEO would be Alstom’s current boss, HenriPoupart Lafarge.

The likely transaction has political ramifications, since the French state owns about 20% of Alstom.

A special dividend would even out the value of Siemens and Alstom, which has too much cash on its balance sheet, to smooth the 50-50 joint venture, one source said. “Will there be a special dividend? Yes,” said the second person.

Siemens and Alstom are strong in high-speed intercity trains with their ICE and TGV models.

Siemens is also the leader in signalling technology, while Bombardier — whose transport headquarters are in Berlin — is stronger in commuter and lightrail trains.

Siemens stands to gain control of Alstom’s main business, since all of Alstom’s divisions deal with the railways and transport industries.

Several politicians and French trade union activists expressed concern over France losing control of its TGV highspeed train — a symbol of national pride that has highlighted French engineering skill — and over possible job losses.

Shares in Alstom, which had rallied in recent sessions on expectation of a deal, slipped 0.25%, while Siemens shares were broadly flat.

“The problem is that at the end of the day, it would likely be a Siemens company, although we still need clarification on the capital structure,” said Prime Partners fund manager Francois Savary, whose company holds Siemens shares.

French right-wing politician Nicolas Dupont-Aignan said the likely deal was more favourable to Germany than France, a criticism echoed by far-right politician Nicolas Bay, the National Front’s secretary-general.

“The Franco-German partnership must not result in the eradication of French industry!” Bay said on Twitter.