Alstom looks at Bombardier as EU blocks merger with Siemens: report
11 Feb 2019
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France’s Alstom is reported to be in talks to merge its rail business with Canada’s Bombardier following the European Commission’s decision to block a tie-up between Alstom and Germany’s Siemens.
The speculation over possible merger talks between the French rail business and Canada’s Bombardier lifted shares of both companies on Wednesday last week.
EU anti-trust regulators rejected the Alstom-Siemens deal over fears that it would hurt competition and lead to higher prices for consumers.
And, despite concessions offered by the companies, the deal collapsed.
A possible merge with Alstom would help Bombardier create the world’s largest rail company. It also gives the Canadian plane and train maker a better set of options.
The merger moves follow increasing threat by China’s state-owned CRRC, the world’s largest train maker, which currently dominates the market.
Bombardier aims to turn its transportation unit, the company’s largest division by revenues, into a $10 billion business by 2020, even as it weighs sale of its plane business to Boeing.
For Alstom, however, a merger with Siemens would have created more strategic value than a tie-up with Bombardier, as the German giant is strong in higher-margin signalling assets.
Bombardier had in 2017 held a failed merger talks with Siemens.
Alstom also said any future rail consolidation in Europe would be examined in light of the failed Siemens-Alstom tie-up.
“If the rules do not change, it is difficult to imagine the consolidation of our sector in Europe,” he said.
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