Bouygues to get 500 million-euro payout from Siemens-Alstom deal

Reuters

Reuters

France's finance minister is defending a deal to merge French high-speed train maker Alstom with Germany's Siemens as crucial to keeping European industry globally competitive.

Siemens will control Siemens Alstom, with 50 percent of the combination plus a few symbolic shares.

A spokesman for Siemens confirmed the pledge, saying it covered major sites in Germany and France.

The agreement between Siemens (SIEGn.DE) and Alstom (ALSO.PA) to merge their rail businesses includes guarantees not to shut plants or enforce compulsory redundancies for four years from closing of the deal, German trade union IG Metall said.

Thanks to its global reach across all continents, its scale, its technological know-how and its unique positioning on digital transportation, 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.

The combined business would have sales of about €15 billion ($18 billion).

Siemens President Joe Kaeser insisted it would be a "merger of equals" and said "a global business needs a global view" instead of a nation-focused mindset.

The enlarged entity is likely to be named Siemens-Alstom, two of the people said.

Siemens chose Alstom as a partner over the Canadian Bombardier.

Poupart-Lafarge also told analysts that the deal wouldn't impact the two companies' relationships with Bombardier.

The deal would dilute French control over Alstom, which shrank dramatically in 2015 when the company sold its electric turbine division to USA industrial conglomerate General Electric Co.

Siemens had sought to head off the GE-Alstom deal in 2014 with a proposal that would have handed its rail operations to the French company in exchange for the power business. Customers will significantly benefit from a well-balanced larger geographic footprint, a comprehensive portfolio offering and significant investment into digital services.

Alstom and Siemens held board meetings today, which are expected to approve the tie-up.

This marriage could harm Bombardier Transportation - whose headquarters is in Berlin, although the railway sector is consolidating in order to compete with CRRC, the chinese automaker backed by the State, which increased its share of the world market.

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