Paris/Munich: French train maker Alstom and German engineering group Siemens said they were in talks about a tie-up of their rail activities as European companies struggle to cope with competition from China.
A deal between Siemens and Alstom would mark the first industrial Franco-German alliance under President Emmanuel Macron as he pushes for greater European economic integration. Rail mergers have become a trend over the last few years as companies seek to contain costs and compete with China’s state-backed CRRC.
The French government said it approved of a tie-up between the rail businesses, which have combined sales of nearly €15bn ($6bn), as long as jobs were not affected.
“It is important that we can strengthen our industrial sectors ... in partnership with Germany,” government spokesman Christophe Castaner said.
The government took control of a 20 percent voting stake in Alstom as part of a 2014 deal that saw the group sell its energy division to General Electric, snubbing Siemens at the time. It has until October to exercise an option to buy that stake from construction group Bouygues.
While the French government looks on the potential deal with a positive eye, it would also closely watch the impact on corporate governance and research and development, a French source said.
“It would be a balanced marriage between the French and the Germans, the French government will want to ensure that this balance is maintained,” the source said, adding that combining two businesses would make the group competitive in a wider market.
Siemens has held discussions with both Alstom and Canadian group Bombardier. Earlier, Le Monde newspaper reported Siemens could announce a deal with Alstom as early as September 26.
Siemens would contribute to the deal rail assets valued at €7bn ($8.4bn) in return for a 45-50 percent stake in Alstom, according to that report.
A source familiar with the discussions said that if the deal with Alstom goes through, Siemens would have a slight majority but Alstom’s French CEO Henri Poupart-Lafarge would head the merged company. “The prospects are better with Alstom,” another source said. “Everything is still open, there’s a lot of movement.”
Alstom and Siemens confirmed talks were under way after the close of financial markets on Friday in Europe.
