Home Business Alstom/Siemens merger - new proposals

Alstom/Siemens merger – new proposals

Siemens and Alstom, two major suppliers to the world’s railways, signed a Memorandum of Understanding on 26 September 2017 to combine Siemens’ mobility business including its rail traction drives business with Alstom.

Global headquarters. as well as the management team for the rolling stock business. was to be located in Paris area and the combined entity would remain listed in France. Headquarters for the mobility solutions business was planned be located in Berlin, Germany. In total, the new entity would have a turnover of €15.3 billion and 62,300 employees in over 60 countries.

Not surprisingly, competitors saw the combined business as a threat, and governments, including the European Union, asked questions about whether this merger would create a monopoly in some areas. Clarifications and proposals were requested by various parties, including the UK’s Office of Rail and Road.

In a representation to the European Commission, the ORR analysed the two companies’ activity in both signalling and rolling stock and expressing concern on the effect on competition, As a result, its report recommended that significant structural remedies were required, including the divestiture of intellectual property and substantial assets as well as the significant transfer of the specialised workforce.

As a result, the deal, which had been expected to be finalised by the end of 2018, is still not concluded.

On 28 January 2019, Siemens and Alstom announced that, in the light of their continuing dialogue with the European Commission, they had decided to further modify the remedies so as to answer the concerns raised by feedback from market testing. According to the announcement, “this package preserves the industrial and economic value of the deal – the order of magnitude of concerned sales communicated previously (i.e., around four per cent of the sales of the combined entity) remaining unchanged”.

However, the announcement continued: “There is, however, still no certainty that the content of this package will be sufficient to alleviate the concerns of the Commission.”

A decision by the Commission is expected by 18 February 2019.

Nigel Wordsworth BSc(Hons) MCIJ
Nigel Wordsworth BSc(Hons) MCIJhttp://www.railengineer.co.uk
SPECIALIST AREAS Rolling stock, mechanical equipment, project reports, executive interviews Nigel Wordsworth graduated with an honours degree in Mechanical Engineering from Nottingham University, after which he joined the American aerospace and industrial fastener group SPS Technologies. After a short time at the research laboratories in Pennsylvania, USA, Nigel became responsible for applications engineering to industry in the UK and Western Europe. At this time he advised on various engineering projects, from Formula 1 to machine tools, including a particularly problematic area of bogie design for the HST. A move to the power generation and offshore oil supply sector followed as Nigel became director of Entwistle-Sandiacre, a subsidiary of the Australian-owned group Aurora plc. At the same time, Nigel spent ten years as a Technical Commissioner with the RAC Motor Sports Association, responsible for drafting and enforcing technical regulations for national and international motor racing series. Joining Rail Engineer in 2008, Nigel’s first assignment was a report on new three-dimensional mobile mapping and surveying equipment, swiftly followed by a look at vegetation control machinery. He continues to write on a variety of topics for most issues.

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