Siemens-Alstom Deal Teeters on Brink Amid Fierce Lobbying
(Bloomberg) -- The European Union’s top competition official all but sounded the death knell on a planned rail merger between Siemens AG and Alstom SA when she suggested she wasn’t swayed by antitrust concessions the companies have said won’t be improved.
Margrethe Vestager told reporters Monday in Paris that while she was still open to a new proposal, it would have to be “very blunt,” implying their current offer isn’t enough to maintain effective competition. Bloomberg reported Friday that Vestager’s team is poised to veto the tie-up between the Franco-German rivals.
“We are very, very late in the process,” the EU’s antitrust commissioner said. “Of course the phone is open, the mailbox as well. I wouldn’t say that we will look into things if we wouldn’t. So as we speak maybe I should check my phone.”
During a press conference, Vestager also said that the EU has no bias against large mergers and the creation of European champions as long as they adhere to some ground rules. She met in Paris with French Finance Minister Bruno Le Maire, who along with his German counterpart has mounted a last-ditch effort to get the deal through.
The commissioner’s comments came after signals increasingly pointed to the accord unraveling. Bloomberg News reported Friday the commission was expected to block the tie-up over concerns it would stifle competition in the region’s train-equipment market. Alstom had already warned its attempts to render the combination more palatable to the commission might come up empty, while Siemens was said to be considering alternatives for its business.
Earlier on Monday, Le Maire spoke of a “moment of truth” before going into a meeting with Vestager. “The German and French governments are in favor of the merger as are the heads of Siemens and Alstom. It’s the best response to the rising power of the Chinese in the rail sector.”
Germany has a “keen interest” in the success of a planned rail merger, German Economy Minister Peter Altmaier told reporters in Munich.
Siemens Chief Executive Officer Joe Kaeser said the company was “doing all we can” to get the merger through.
* Alstom Warns Siemens Rail Deal Could Be Blocked by Europe
* Vestager Talks Tough on Deals After Siemens-Alstom Meeting
* Siemens-Alstom Assets Said to Draw Bids Amid Push to Sway EU
* Siemens to Merge Rail Operations With French Rival Alstom
Proposed concessions aimed at allaying EU objections -- plus a last-minute lobbying campaign from politicians warning of the threat of Chinese rivals -- had so far failed to sway Vestager, said a person familiar with the matter, who spoke on condition of anonymity. A senior German official who asked not to be named also said he expected a veto.
A collapse of the deal would be a setback for the manufacturers, which had strong political backing from the French and German governments for their combination and spent months lobbying to get it past regulators. The plan, unveiled in September 2017, was to build a transportation giant out of Siemens’s mobility unit and Alstom, with the idea that the resulting European rail champion, with combined sales of about 15 billion euros ($17 billion), would be able to counter competition from China.
Yet signs that the deal was in trouble started to emerge in October when the Commission issued a harsher-than-expected statement of objections. The companies offered up a package of businesses to sell to gain the green light, including signaling and fast-train operations, but the day after a crucial meeting with regulators, the writing was on the wall.
Vestager’s thinly veiled warning followed a last-ditch salvage attempt by Siemens and Alstom executives to make further concessions, Bloomberg News has reported. Representatives for Alstom declined to comment further. The deal faces a Feb. 18 EU deadline.
While Vestager has blocked only three deals since she became commissioner in 2014, EU opposition has forced several other companies to abandon transactions, often after they decided concessions to gain approval would be too painful.
The Siemens and Alstom combination would have given the German company control of an icon of French industry that developed the high-speed TGV trains that zip across the countryside at upwards of 300 kilometers an hour (186 miles per hour). President Emmanuel Macron’s government backed the deal after receiving assurances on jobs, and German Chancellor Angela Merkel has promoted a platform of closer European ties.
Capping years of speculation in the industry about the need for consolidation, the tie up was to mirror the emergence of European planemaker Airbus in the 1970s that went on to become the biggest competitor to Boeing Co.
Siemens Alstom, as the combined company was to be called, would have had about 62,000 employees and become the second-largest maker of rail cars and locomotives after China’s CRRC Corp.
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