Alstom, Siemens set to merge rail businesses

Marsha Scott
September 28, 2017

FRENCH train-builder Alstom is to merge its rail business with German-based Siemens Mobility. In another sign of France's willingness to make concessions on the ownership of strategic interests, an Italian government source said shipbuilder Fincantieri FCT.MI was poised to take effective control of shipyard group STX France, ending a lengthy dispute. The combination would be attractive especially for Alstom shareholders, while Siemens would benefit mainly from the new entity's ability to better compete with CRRC, he said.

Siemens emerged victorious after France accepted a ruling from the European Union's rail-safety body saying the Velaro presented no more of a danger than the TGV. The producers of the TGV and ICE high-speed trains wanted to grow by more than 4 percent per year together and achieve combined revenue of more than 20 billion euros (23.45 billion USA dollars) as "Siemens Alstom" by 2023.

Pascal Novelin, a CGT unionist said: "Transport in France is a strategic asset and they're selling it off".

Though Alstom is of a similar size to the rail division of Munich-based Siemens, with annual sales of more than 7 billion euros ($8.20 billion), the German business is part of a group that ranks as Europe's largest manufacturer with nearly 80 billion euros ($93.76 billion) in revenue and a product range spanning power grids and building controls to medical scanners, washing machines and wind turbines.

Siemens Alstom, which will have about 62,000 employees, will become the second-largest maker of rail cars and locomotives after China's CRRC Corp. They closed up 4.2 and 1.2 percent respectively. "We are confident", he said on a call with analysts.

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Deutsche Bank kept a "hold" rating on Alstom shares.

But Siemens has also been courting Canadian firm Bombardier, whose European operations are based in Berlin, and the two companies have their own detailed plan for two joint ventures covering rolling stock and signaling. "A global business needs a global view" instead of a nation-focused mindset, he said. It will also get warrants allowing it to eventually acquire another 2 percent.

LAST FISCAL YEAR ORDERS - Siemens 8 billion euros; Alstom 10 billion; total 18 billion euros.

Alstom CEO Henri Poupart-Lafarge, who will run the merged company, said the deal would ultimately create jobs and innovation, and promised that no French site would close within the next five years.

"Today is a key moment in Alstom's history, confirming its position as the platform for the rail sector consolidation".

Other reports by MaliBehiribAe

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