The European Commission announced, Friday, July 31, the approval, subject to conditions, of the takeover of the transport arm of Canadian Bombardier, which will give birth to a rail giant, a year and a half after the abortive marriage of the French group to Siemens. The new group employs (before the divestments granted to satisfy Brussels) around 76,000 people with a turnover of 15.5 billion euros. Its objective is to compete with the Chinese CRRC, world number one in the sector.
“Thanks to the comprehensive set of corrective measures proposed to resolve the competition concerns in the very high-speed train, mainline train and mainline signaling sectors, the transaction was promptly reviewed and cleared by the Commission “, said the Vice-President of the European Executive, Margrethe Vestager, quoted in a press release.
The boss of Alstom, Henri Poupart-Lafarge, had assured in the morning to wait ” with confidence “ the decision of the Commission. “The dialogue with Brussels was extremely fluid, extremely rapid since we announced the transaction with Bombardier in February, so five months later we have the decision”, he had stressed.
Sale of a production site in Alsace
In order to make room for its rivals, Alstom has offered several commitments to the European Commission, guardian of competition in Europe, in particular the sale of its production site in Reichshoffen, located in Alsace, which employs 780 people. If it had feared a negative impact of the project on competition, the Commission could have launched a more in-depth investigation, which would have lasted around four months, before taking a final decision.
Alstom had notified mid-June in Brussels of the plan to buy out its competitor Bombardier Transport for six billion euros, an operation which must be finalized in the first half of 2021. The two groups have a virtual monopoly on rolling stock in France, where they collaborate regularly, such as on the Paris metro and RER.
The threat of Chinese competition had already been mentioned to justify the takeover of Alstom by Siemens, an operation that was blocked in February 2019 by the Commission. Brussels feared too dominant a position in Europe in rail signaling and high-speed trains.
Seven billion euros in turnover
The EU must not help build industrial champions “Bottle-fed and pampered” but let the competition stimulate their creation, replied Mr.me Vestager to those who had challenged his decision, especially in France. Alstom’s overlaps with Bombardier were, in fact, much smaller than with the German group, which made it easier to approve the transaction.
Based in Berlin, Bombardier Transportation achieved 2019 sales of 8.3 billion US dollars (7 billion euros), ending the year with an order book of 35.8 billion dollars (30, 1 billion euros). This branch of Bombardier, 32.5% owned by the Caisse de depot et placement du Québec (CDPQ), has in particular in Crespin (North) the largest railway plant in France, with 2,000 employees.
For its part, Alstom operates many smaller sites. The manufacturer ended its 2019-2020 financial year (ended at the end of March) with a slight increase in turnover, to 8.2 billion euros. Its order book peaks at 40.9 billion euros. The Covid-19 crisis should have an impact on the current fiscal year, but the group believes it has sufficient cash to cope with it.