The combination will give the German company control of an icon of French industry that developed the high-speed TGV trains that zip across the countryside at upwards of 300 kilometers an hour (186 miles per hour). Thanks to its global reach across all continents, its scale, its technological know-how and its unique positioning on digital transportation, the combination of Alstom and Siemens Mobility will bring to its customers and ultimately to all citizens smarter and more efficient systems to meet mobility challenges of cities and countries.
Siemens Chief Executive Joe Kaeser told a news conference that of course there would be redundancies but that he saw these more in administrative and back-office functions than in engineering.
"Politicians will also likely try to ensure some form of jobs protection in France (28 per cent of Alstom's workforce) and Germany (39 per cent of Siemens'workforce), making cost synergies hard to extract", analysts wrote in a note. The renamed Siemens Alstom, with sales of about 15.3 billion euros ($18 billion), will remain based in the Paris area.
The companies expect annual synergies of 470 million euros and Alstom will have to pay a 140 million-euro break up fee if it decides to cancel the transaction.
Siemens stands to gain control of Alstom's main business, since all of Alstom's divisions deal with the railways and transportation industries.
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However, Henri Poupart-Lafarge will continue to lead the company as CEO and will be a board member.
But Siemens has also been courting Canadian firm Bombardier, whose European operations are based in Berlin, and the two companies have their own detailed plan for two joint ventures covering rolling stock and signaling.
The merger between Siemens' and Alstom's rail units has yet to be approved by the European Commission's competition authorities.
The French state will not use its option to buy 20 percent of Alstom from Bouygues as part of a deal to facilitate the sale of Alstom's energy business to General Electric, two sources close the matter said. It is estimated that synergies will be of 554,2 million USA $for four years after the closing of the transaction. Kaeser announced the goal to lift the French company's profit margin before taxes and interest from 5.8 percent to Siemen's level of 10 percent.