Alstom and Siemens
Merger proposal involving Siemens and Alstom set to unite Europe’s biggest two rolling stock manufacturers.
SIEMENS and Alstom have signed a Memorandum of Understanding to combine Siemens’ mobility business, including its rail traction drives business, with Alstom.
The merger will unite Europe’s biggest two rolling stock manufacturers. Global headquarters, as well as the management team for rolling stock, will be located in the Paris area, and the combined entity will remain listed in France. Headquarters for the Mobility Solutions business will be located in Berlin.
In total, the new entity will have 62,300 employees in over 60 countries. However, there will be redundancies (with the exact number to be confirmed) if the merger is approved.
Although Siemens is to pay a premium for effectively gaining control of Alstom, the special dividend of around four euros per share (£3.54) will be paid for out of Alstom’s cash reserves. A further extraordinary dividend of around four euros per share will be paid out of the proceeds of Alstom’s options for its joint ventures with GE in the energy sector.
Siemens will receive newly issued shares in the combined company representing 50% of Alstom’s share capital on a fully diluted basis. The transaction will take the form of a contribution in kind of the Siemens Mobility business, including its rail traction drives business, to Alstom for newly issued shares of Alstom and will be subject to Alstom’s shareholders’ approval.
“This Franco-German merger of equals sends a strong signal in many ways,” said Joe Kaeser, President and CEO of Siemens.
“We put the European idea to work, and together with our friends at Alstom we are creating a new European champion in the rail industry for the long term. This will give our customers around the world a more innovative and more competitive portfolio.”
Henri Poupart-Lafarge, Chairman and Chief Executive Officer of Alstom, said: “Today is a key moment in Alstom’s history, confirming its position as the platform for the rail sector consolidation.
“Mobility is at the heart of today’s world challenges. Future modes of transportation are bound to be clean and competitive. Thanks to its global reach across all continents, its scale, its technological know-how and its unique positioning on digital transportation, the combination of Alstom and Siemens Mobility will bring to its customers and ultimately to all citizens smarter and more efficient systems to meet mobility challenges of cities and countries.
“By combining Siemens Mobility’s experienced teams, complementary geographies and innovative expertise with ours, the new entity will create value for customers, employees and shareholders.”
Poupart-Lafarge defended the merger at a press conference on September 27, saying: “This is no do-or-die type of merger… Alstom has been enjoying a great dynamism in a growing market. When we looked four years ago, Siemens was the best fit by far. The transaction has been very fast because a lot of the groundwork has already been done.”
Kaeser added: “We are going into the fourth industrial revolution. The merger will be a test of how we face the future. The merger will strengthen European technical leadership. The SiemensAlstom merger will be living proof that we can get things done in Europe.”
The new entity will have an order backlog of 61.2 billion euros (£54.1bn), revenue of 15.3bn euros (£13.5bn), adjusted earnings before interest and taxation (EBIT) of 1.2bn euros (£1bn), and an adjusted EBIT margin of 8.0%. In a combined set-up, Siemens and Alstom expect to generate annual ‘synergies’ of up to 470 million euros (£416m) four years after the deal is concluded.
Alstom’s board and Siemens’ supervisory board both support the deal, as does Alstom’s majority