Siemens, Bombardier vie for control of rail JV: sources

Wed Apr 12, 2017 9:37am EDT
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By Georgina Prodhan and Alexander Hübner

FRANKFURT (Reuters) - Talks about uniting the rail operations of Germany's Siemens (SIEGn.DE: Quote) and Canada's Bombardier (BBDb.TO: Quote) are being complicated by the desire of both companies to keep control of a merged business, two people close to the matter said on Wednesday.

Antitrust issues and political considerations could also ultimately make a deal to create a company with combined sales of $16 billion hard to pull off, industry experts said.

The two groups are talking about a joint venture that could compete better with Chinese state-backed market leader CRRC (601766.SS: Quote), which is expanding aggressively abroad and would still be twice their combined size by revenue.

"It could go fast, it could be very drawn-out or it could fail. It's completely open," one of the people said.

The three main rivals to CRRC -- Bombardier, Siemens and France's Alstom (ALSO.PA: Quote) -- have talked to each other about combining their businesses in various arrangements over the past years.

A Bombardier-Siemens combination could run into anti-trust issues as it did last time it surfaced, with significant overlap particularly in Germany.

"On a country-by-country basis the deal looks difficult to pull off in Europe, and that's why it has not happened over the past 20 years," a person familiar with the industry said.

In a global context the arrival of CRRC has however changed the shape of the industry and Europe should be interested in creating a strong competitor to the emerging Chinese challenge, the person said.   Continued...

Siemens logo is pictured at a building of the manufacturing plant of Siemens Healthineers in Forchheim near Nuremberg, Germany, October 7, 2016. REUTERS/Michaela Rehle