Published: Thu, September 28, 2017
Worldwide | By Sean Reid

Alstom and Siemens to create 'European rail champion'

Alstom and Siemens to create 'European rail champion'

President Macron has been accused of failing to back French industry as the German company Siemens prepared to take control of Alstom, the maker of France's emblematic high-speed trains.

As a result, Kaeser said there was bound to be redundancies as a result of the companies merging.

"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", Mr. Poupart-Lafarge said.

The proposed merger marks a major test of Europe's ability to overcome national economic rivalries and establish a European champion, akin to Airbus SE in aviation. The Siemens-Alstom deal was announced after months of talks between Siemens and Bombardier.

Yet the merger has strong backing from French President Emmanuel Macron, who has argued that Europe needs to cooperate across borders to compete better against economic powers in China, the USA and elsewhere.

The French government is fending off heated criticism from across the political spectrum over the ambitious deal, seen as selling out a French industrial champion to German rivals.

Siemens and Alstom say they aim to save US$554 million a year by joining forces in a European train-making giant-and they're brushing off complaints the deal means job cuts.

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Siemens and Alstom have signed a Memorandum of Understanding to combine Siemens' mobility business including its rail traction drives business with Alstom. The Tokyo-based group followed up by purchasing the signaling business of Italy's Finmeccanica SpA in its largest-ever overseas deal. "We are confident", he said on a call with analysts.

The union has the unanimous support of Alstom's board and Siemen's supervisory board, as well as the support of Bouygues and the French State. Its headquarters will remain in France, as will its research-and-development centers. Siemens's mobility unit had EUR7.8 billion in revenue a year ago. Hitachi Rail is now the world's sixth-biggest rail company.

Alstom, one of France's long-established railway and train operators, employs 32,800 people in fast train (TGV) and tramway manufacturing area.

Alstom has faltered in recent years, forcing the French state to prop it up repeatedly.

The combination will give the German company control of an icon of French industry that developed the high-speed TGV trains that zip across the countryside at upwards of 300 kilometers an hour (186 miles per hour).

Jacquie McNish and William Boston contributed to this article.

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