MUNICH • German industrial group Siemens and French rival Alstom have agreed to merge their rail operations, creating a European champion to better withstand the international advance of China's state-owned CRRC Corp.
Siemens will own 50 per cent plus a few shares of the joint venture, while Alstom will supply Mr Henri Poupart-Lafarge as chief executive, helping to counter criticism that France is giving up control of another national industrial icon.
The framework deal, which still has to be approved by Alstom shareholders as well as regulators, is a Franco-German industrial breakthrough for French President Emmanuel Macron, but a move that has riled opposition politicians.
Finance Minister Bruno Le Maire said on Tuesday the French government welcomes the planned tie-up, which he said would protect French jobs. The French state said it would not exercise an option to buy a 20 per cent stake in Alstom from industrial group Bouygues.
The Siemens and Alstom transport businesses span the iconic French TGV and German ICE high-speed trains as well as signalling and rail technology. They have combined sales of €15.3 billion (S$24.4 billion) and earnings before interest and tax of €1.2 billion.
The deal leaves out in the cold Canadian transportation group Bombardier, which also held talks with Siemens, sources have said.
China's CRRC, with annual revenue of about US$35 billion (S$47.5 billion), is bigger than Siemens Mobility, Alstom and Bombardier Transportation combined.
It has won projects in Britain and the Czech Republic in the past year, and is eyeing the United Kingdom's High Speed 2 project, which will connect London with cities in the north of England.