Alliance between Alstom and Siemens for an “Airbus of the rail”

Va-t-on to a “Airbus of the rail” to counter the chinese giant CRRC? Maybe. This Friday, in the wake of the revelations of the agency Bloomberg on a reconciliation in the rail sector between Alstom and Siemens, The World announced that this transaction could be announced this Tuesday, September 26, in the aftermath of the German elections. According to the newspaper, a board of directors of Alstom is expected that day and the assumption of a reconciliation between the two groups “enjoys the support of the French government”. After the market, Alstom has confirmed talks with Siemens over a “possible combination” in the transport.

Siemens could reap between 45% and 50% of Alstom

When asked about this during the proceedings of the council of ministers, the government spokesman Christophe Castaner replied that France did not care about see large groups to work at reconciliation if the synergies being sought are not obtained at the expense of employment. According to The World, Siemens intends to bring to Alstom its rail operations, both the rolling stock and the activity of signaling – that would be valued around 7 billion euros, and the French group would launch in exchange for a reserved capital increase at the conglomerate German. In this scenario, Siemens could as well obtain, according to the premium he would consent, and valuation deductions, between 45% and 50% of the capital of Alstom.

At the end of may, Henri Poupart-Lafarge, chairman of Alstom reiterated its interest to participate in the movement of consolidation in the rail:

“We have always said that we wanted to participate in an active way. We are well positioned. Our dynamic is good, and we have the balance sheet flexibility and capital-intensive to do that,” he told The Tribune.

The track Bombardier always on at Siemens?

The spokesperson of Alstom and Siemens have not wanted to comment on this information.
A source close to the dossier said on Thursday to Reuters that Siemens was discussing a merger of its rail division with that of Alstom, or of the canadian Bombardier, and choice in the days to come with which of the two he would continue the negotiations.

Analysts from JPMorgan, in a note published Thursday, they consider that a reconciliation between Siemens and Alstom would be better from an industrial point of view that a merger with Bombardier. Depending on the price of the agreement, they believe that the cost synergies between Siemens and Alstom could more than compensate for the negative effects related to the activity of rolling stock in terms of sales.

JPMorgan estimates that the capital needs of Alstom to enter into a merger with Siemens might reach up to 4.5 billion euros, which could be partially or totally funded by significant equity participation of Siemens in the French group.

In Exchange, the Alstom share, up then down, won to 4.64% at 17: 15. At this price level, the French group is valued at 7.3 billion euros. Frankfurt, on the other hand, as Siemens digs his losses and abandons 0,68%.

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