Saturday 18 August 2018

Alstom-Siemens rail deal talks leave Bombardier in cold

The talks for a tie-up come as all three companies are facing increased competition for contracts from industry leader CRRC Corp of China, formed from a 2015 merger of the country’s two main regional train-makers.
The talks for a tie-up come as all three companies are facing increased competition for contracts from industry leader CRRC Corp of China, formed from a 2015 merger of the country’s two main regional train-makers.

Tara Patel, Gregory Viscusi and Mark Deen

French multinational Alstom has confirmed it is in talks with Germany's Siemens about a possible combination of their rail businesses, a tie-up that would bring together two former European arch-rivals and leave Canada's Bombardier exposed to cut-throat competition from China.

"No final decision has been made, discussions are ongoing and no agreement has been reached," Alstom said yesterday. Siemens, based in Munich, acknowledged the statement and also said that no decision had been reached.

French president Emmanuel Macron's government signalled hours earlier that it supported deeper Franco-German corporate ties, suggesting a potential deal had political backing. The announcement also comes ahead of German elections today, which Chancellor Angela Merkel has run on a platform of political and economic stability and closer ties across Europe.

An agreement between the makers of the French and German TGV and ICE high-speed trains criss-crossing the countries adds a surprise twist to negotiations in the global train industry seeking to consolidate assets.

Montreal-based Bombardier, which employs around 4,500 people in Northern Ireland, had also been in talks with Siemens about combining the companies' rail divisions.

Talks had centred on two joint ventures, one on the signalling operations and one on rolling stock, people familiar with the negotiations have said. Bombardier did not respond to requests for comment.

The talks for a tie-up come as all three companies are facing increased competition for contracts from industry leader CRRC Corp of China, formed from a 2015 merger of the country's two main regional train-makers.

During the past few months, Alstom, Bombardier and Siemens executives have spoken about the need for consolidation in the industry, while declining to comment specifically about any possible agreements.

"We're watching French-German talks," French cabinet spokesman Christophe Castaner said last week when asked about Siemens and Alstom. "We have to see the terms, but it is important to reinforce our industry with Franco-German unity."

The model for such co-operation between the eurozone's two biggest economies is Airbus. The Toulouse-based aircraft manufacturer, founded in 1970, was formed from companies from four European countries that went on to become the biggest competitor to Boeing.

Macron has repeatedly said that cross-border co-operation in the region offers the best way to tackle issues ranging from industrial development to immigration and defence.

Closer ties could be in the offing in the banking sector, as well, with French lender BNP Paribas among the European banks that could buy Germany's Commerzbank, according to reports.

Bloomberg

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