French transport facility manufacturer Alstom and German corporation Siemens confirmed late Tuesday the merger of their rail operations, which aims to create an "European champion in mobility."
"The combined entity will offer a significantly increased range of diversified product and solution offerings to meet multi-facetted, customer-specific needs, from cost-efficient mass-market platforms to high-end technologies," the French company said in a statement.
"The global footprint enables the merged company to access growth markets in Middle East and Africa, India, and Middle and South America where Alstom is present, and China, United States and Russia where Siemens is present," it said.
The merger is still to be approved by Alstom shareholders as well as regulators, according to the statement.
Under the tie-up which offers "unique customer value and operational potential," the German group will own 50 percent plus a few shares of the joint venture, and Alstom's current CEO Henri Poupart-Lafarge will be the new company's chief executive.
Following the latest annual statements of the two groups, the joint venture will benefit from an order backlog valued at 61.2 billion euros (about 71.94 billion U.S. dollars) and revenue worth 15.3 billions euros (about 16.92 billion U.S. dollars) in addition to the 8-percent adjusted Earning Before Interests and Taxes margin.
Furthermore, Alstom and Siemens eye to generate annual synergies of 470 million euros (about 552 million dollars) latest in Year Four post-closing and targets net-cash up to 1 billion euros (about 1.175 billion dollars).
The global headquarters, rolling stock business and stock-market listing of the new joint company will be in Paris and the mobility solutions business in Berlin. It will employ 62,300 workers in over 60 countries, according to the press release.
"This Franco-German merger of equals sends a strong signal in many ways. We put the European idea to work and together with our friends at Alstom, we are creating a new European champion in the rail industry for the long term," said Joe Kaeser, Siemens CEO.
Poupart-Lafarge also hailed the merge as a key moment in the company's history.
"Thanks to its global reach across all continents, its scale, its technological know-how and its unique positioning on digital transportation, the combination of Alstom and Siemens Mobility will bring to its customers and ultimately to all citizens smarter and more efficient systems to meet mobility challenges of cities and countries," he said.