Alstom to merge with Siemens' rail business

Combined revenues of the new company could exceed $18 billion
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BrightLine trainsets BrightPink and BrightBlue appear inside the passenger railroad's West Palm Beach, Fla., shops. Siemens makes the Charger locomotives and passengers coaches in each set.
Bob Johnston
FRANKFURT — Siemens and Alstom officials say they will merge their rail operations in a business decision that increases competiveness with China’s state-owned China Railroad Rolling Stock Corp., Reuters reports.

In a separate news release on Tuesday, Alstom officials said the union would create a "European Champion" in mobility.

Siemens will own 50 percent of the new company, Alstom CEO Henri Poupart-Lafarge will serve as CEO and a Siemens executive will serve as chairman.

The business arrangement, which still needs approval from Alstom shareholders and regulators, forms a European rail industry pact with combined annual revenues of $18 billion.

In the U.S., both companies are growing their respective shares of the passenger market with Alstom ramping up tooling and production in Hornell, N.Y., to fulfill a nearly $2 billion order with Amtrak for high speed trainsets for the Northeast Corridor. The first of Alstom's Avelia Liberty train sets are expected in 2019. Amtrak declined to comment on the merger. Siemens, meanwhile, supplied more than 70 locomotives for Amtrak and Southeastern Pennsylvania Transportation Authority service on the NEC. It has also nearly sewn up the market for new orders on passenger diesel-electric locomotives by delivering its Charger locomotives to several states on Amtrak-served state-sponsored routes, as well as complete trainsets for Florida's Brightline. Nearly all of Siemens' U.S. work is completed at shops in Sacramento, Calif.

The merger also puts to rest speculation that Siemens’ team would explore a potential merger with Canada’s Bombardier Transportation. Sources say Siemens’ team met with Bombardier to explore possibilities prior to its agreement with Alstom.

One of Alstom’s most notable projects is with French rail operator SNCF and its TGV trainsets, while one of Siemens’ most profiled projects was a consortium it led alongside Bombardier with Germany’s high-speed ICE train. Both Siemens and Alstom are industry pioneers in rolling stock and rail industry technology.

As the Siemens Alstom deal moves move forward, China’s CRRC still generates about $35 billion in annual revenues, which is larger than Siemens, Alstom, and Bombardier combined.

The new company, Siemens Alstom, will have its global headquarters and rolling stock business in Paris, while its signaling and technology unit will be headquartered in Berlin. Combined, the new company will have approximately 62,300 employees. Officials expect the deal to close by the end of 2018.
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