Siemens, Alstom in Talks to Merge Rail Transportation Businesses -- 2nd Update
September 22 2017 - 3:09PM
Dow Jones News
By Robert Wall and Ben Dummett
German industrial giant Siemens AG and French train-maker Alstom
SA are in talks to create a European rail transportation powerhouse
to better rival strong competition from China.
France's Alstom, which makes trains and buses, said Friday it
was in discussions to combine its operations with the mobility unit
of Siemens. The German company confirmed the talks but didn't
provide details.
A combination would create a European transportation business
with about $18 billion in annual sales. Alstom had sales of EUR7.3
billion ($8.7 billion) in the financial year ended March 31.
Siemens's mobility unit had EUR7.8 billion in revenue last year.
Under the combination, Siemens would move its mobility operations
into Alstom while taking control of the French entity, said a
person familiar with the plans.
Western train makers have been feeling pressure to gain scale
after the 2015 merger of Chinese train makers CSR Corp. and China
CNR. That tie-up has enabled the Chinese entity to win business by
cutting costs. The Chinese company had about $34 billion in sales
last year.
China has invested massively in high-speed rail, helping fuel
growth of its train makers.
Alstom Chief Executive Henri Poupart-Lafarge early this year
said the train-making industry would "go through some kind of
consolidation."
Siemens has been looking for ways to gain heft for some time.
The company also has held talks with Bombardier Inc. about joining
their train-making business. Siemens wouldn't comment on whether
discussions with Alstom meant Bombardier talks had stalled. A
Bombardier spokesman declined to comment.
The talks with Bombardier, which has its rail business based in
Germany, are continuing and far advanced, a person familiar with
discussions said Friday. Under that deal's structure, Siemens would
control a joint-venture focused on lucrative rail-signaling
operations while Bombardier would have a majority stake in a
partnership overseeing the train-making business, known as
rolling-stock. The combined sales of a Siemens and Alstom tie-up
would be slightly larger than one involving the German company and
Bombardier.
Merging French and German train entities could have political
appeal in Berlin and Paris. German Chancellor Angela Merkel and
French President Emmanuel Macron have enjoyed a close relationship.
France and Germany years ago pooled their commercial aerospace
activities to create Airbus SE, the world's No. 2 plane maker after
Boeing Co.
Siemens and Alstom three years ago held talks about merging
their energy assets in the face of a proposal by General Electric
Co. to buy the French company's power generation business. The
German overture was welcomed by politicians in Paris, though GE
eventually won out, leaving Alstom focused on transportation.
Alstom said in a statement that "no final decision has been
made" on a transport deal with Siemens. "Discussions are ongoing
and no agreement has been reached," the company based on the
outskirts of Paris said.
Write to Robert Wall at robert.wall@wsj.com and Ben Dummett at
ben.dummett@wsj.com
(END) Dow Jones Newswires
September 22, 2017 14:54 ET (18:54 GMT)
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