Alstom & Siemens:
The Merger is on the Tracks
On September 27, the two largest train producing companies in Europe, Alstom and Siemens, proposed a merger in order to create "a new European champion in the rail industry for the long term," to beat competition from China. "The message of this merger is [also] that the European spirit is alive," declared Joe Kaeser, the chief executive of Siemens.
Officially, it is an alliance of equals, however, Siemens "swallows" Alstom. Indeed, Siemens will acquire 50% of Alstom's capital. The French high-speed TGV therefore passes under the German flag. We already know that the name of the new company will be Siemens-Alstom and the logo will draw more from the puzzle of Alstom. Discussions began in Spring 2017 but afterward, everything went pretty quickly. "Siemens was our first choice," said the Alstom management.
The operation was closely monitored by the public authorities and notably by French President Emmanuel Macron. The merger's goal is to create a giant capable of competing with China Railway Rolling Stock Corporation, known as CRRC, which has grown into the world's largest and most competitive maker of railway equipment. The two groups are complementary from both a geographical and a business point of view: Alstom specializes on rolling stock and Siemens provides the infrastructure making it possible to run trains. In other words, it is a real marriage of reason between two groups, with very different cultures, who have been at odds with each other in recent years.
The merger has already captured the attention of Emmanuel Macron's cabinet, as being a good deal. Concretely, the chief executive of the new company is going to be Henri Poupart-Lafarge-a French citizen-already at the head of Alstom. The headquarters will also be in France as well as the listing on the stock exchange. Finally, while populist parties such as the "Front National" in France are generally hostile to political ties in the European Union, yet in this case they seem to be less likely to oppose corporate mergers to protect European companies from foreign competition.