Siemens and Alstom Will Merge Rail Operations Into Global Giant


Francois Hollande, the former president of France, inspecting one of Alstom’s high-speed TGV trains in February.

Sebastien Bozon/Agence France-Presse — Getty Images

The German industrial giant Siemens plans to merge its rail business with the French train equipment maker Alstom, the companies said Tuesday, creating a behemoth that can compete with the Chinese-state backed China Railway Rolling Stock Corporation.

The combined company, Siemens Alstom, would make systems and equipment for two of Europe’s high-speed rail lines, Germany’s ICE and France’s TGV, which can zip between cities at about 185 m.p.h.

“We are creating a new European champion in the rail industry for the long term,” said Joe Kaeser, the chief executive of Siemens. “This will give our customers around the world a more innovative and more competitive portfolio.”

The European rail industry faces pressure from China Railway Rolling Stock Corporation, which has been making an aggressive push to expand around the globe, including in the United States. It is part of China’s larger economic and geopolitical agenda that encourages its technology and infrastructure companies to seek foreign markets, refashioning the global economic order to draw countries and companies more tightly into the country’s orbit.

The European deal — a combination of the once-bitter rivals — seeks to compete with that, and has the support of the Alstom board and the French government, according to a joint statement from the companies.

The “merger of equals,” which developed as Siemens discussed joint ventures with Bombardier, a Canadian maker of trains and planes, is expected to close by the end of next year. It will result in a company with revenue of 15.3 billion euros, or about $18 billion. Under the agreement, Siemens will transfer its mobility business, which makes rail and signaling equipment, to Alstom in exchange for 50 percent of the new company. Siemens Alstom will be based in the Paris area and led by Alstom’s chief executive, Henri Poupart-Lafarge.

“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,” Mr. Poupart-Lafarge said.

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