Published: Thu, September 28, 2017
World Media | By Shelia Harmon

Alstom and Siemens announce merger

Alstom and Siemens announce merger

"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", Siemens CEO Joe Kaeser said in a news release.

"Politicians will also likely try to ensure some form of jobs protection in France (28 per cent of Alstom's workforce) and Germany (39 per cent of Siemens'workforce), making cost synergies hard to extract", analysts wrote in a note.

The corporate name of the combined group will be Siemens Alstom and the group headquarters is expected to be in the Paris area of France.

Siemens Mobility is set to be merged into Alstom, in which Siemens would hold 50pc plus one share, while the chief executive would be Alstom's current boss Henri-Poupart Lafarge.

The companies have combined sales of 15.3 billion euros (about $18 billion) before interest and tax of 1.2 billion euros (about $1.4 billion).

The move is the latest in a wave of rail industry consolidation in the past few years. The Mobility Solutions business will be run out of Berlin. The French government owns 20 percent of Alstom and intervened repeatedly in the past to protect the struggling maker of high-speed TGVs and its jobs.

Siemens and Alstom announced they have signed a Memorandum of Understanding to merge their rail traction drives businesses. The French State confirms that the loan of Alstom shares from Bouygues SA will be terminated in accordance with its terms no later than October 17, 2017 and that it will not exercise the options granted by Bouygues.

Nevertheless, on the Toronto stock Exchange, Bombardier's share closed at $ 2.27 a, up 13 cents, or 6,07 %, even if Washington had not yet indicated whether he was going to impose punitive measures on the CSeries, following a complaint of the Boeing company.

"The merger is necessary to challenge the Chinese mastodon (CRRC Corp) which is two to three times bigger than we are", said Claude Mandart, head of the biggest Alstom trade union, the CFE-CGC, earlier Tuesday.

It is noted that merger between Alstom and Siemens has come to an end at end of August between Macron and German Chancellor Angela Merkel, and that two leaders have agreed to unite. The new company is meant to be a "European champion", competing more effectively with the Chinese state-owned rolling stock builder CRRC.

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