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Alstom/Siemens merger – new proposals

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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.


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