Paris (AFP) – The French government defended allowing train maker Alstom to be swallowed by its German rival Siemens on Wednesday as it came under attack from opponents for failing to protect a domestic industrial giant.
Alstom and Siemens, which make France’s high-speed TGV and Germany’s ICE trains, announced a tie-up late Tuesday to create a new European rail champion.
Both sides insist it is a “merger of equals”, with the combined entity to be headed by Alstom’s current chief executive Henri Poupart-Lafarge and based in the Paris region.
But Siemens will be the biggest shareholder with a 50-percent stake in the new company and has the option to increase this to a majority after four years, while the French state has relinquished its stake.
“Some people are free to look back at yesterday’s world. We are looking forward,” French Economy Minister Bruno Le Maire said Wednesday, as he compared the new train maker to European aircraft maker Airbus.
Takeovers of major industrial companies are extremely sensitive in France, where successive governments have generally sought to protect the country’s manufacturing capacity and avoid major job losses.
The TGV — “Train a grande vitesse”– is a source of national pride and France’s widely admired locomotives have frequently smashed world speed records, making the country a pioneer in the sector.
Laurent Wauquiez, who is seeking the leadership of the right-wing Republicans party, accused Macron of “selling us down the river… as it’s Germany which is buying France.”
Another leading member of the party, Xavier Bertrand, dubbed the combined group a “fake rail Airbus.”
On the Paris stock exchange on Wednesday, Alstom shares shot up by more than eight percent, while Siemens’ shares were among the top gainers in Frankfurt, adding 1.2 percent.
– New direction? –
Investors and French trade unions are watching the Alstom-Siemens deal with interest as they seek to decipher the industrial policy of Macron, a 39-year-old pro-business centrist who rose to power in May.
Macron favours greater European integration, but he nationalised strategic French shipyard STX in western France in July to block a takeover by Italian firm Fincantieri.
A compromise is set to be announced later on Wednesday during a meeting between the French and Italian governments in the eastern French city of Lyon, with reports suggesting Fincantieri could ultimately end up with a majority stake.
“We still don’t really know about his (Macron’s) industrial policy,” the head of France’s Industrial Federation Group (GFI), Philippe Darmayan, told AFP.
Mathieu Plane, an economist at the OFCE economic think-tank at Sciences Po university in Paris, said that Macron had “quite a liberal view of the economy… but on industrial policy he is more interventionist.”
The bosses of Siemens and Alstom insist the deal was necessary to help them compete with state-run Chinese rival CRRC Corp, the world’s biggest train maker which was formed via a merger of two Chinese firms in 2014.
“We are creating a new European champion in the rail industry for the long term,” Siemens chief executive Joe Kaeser said.
The powerful German union IG Metall also saw the deal as a “potential opportunity”.
It “will create a European group with good chances of success in a fierce global competitive environment,” said one top official, Juergen Wechsler, on Wednesday.
Claude Mandart, the head of Alstom’s biggest trade union, CFE-CGC, said Tuesday that the merger was “necessary to challenge the Chinese mastodon which is two to three times bigger than we are.”
The move will complete the transformation of Alstom, which sold off its energy business to American rival General Electric in 2015 for 9.5 billion euros ($11.3 billion).
Economy Minister Le Maire insisted that France had “obtained guarantees which are solid” about preserving jobs and factories in France, including Alstom’s main plant in Belfort in eastern France.
Though the chief executive will be French, the board of directors of the new group will comprise 11 members, six of whom will be named by Siemens, including the chairman.
Alstom CEO Poupart-Lafarge said he was “confident” the tie-up would win approval from Europe’s competition authorities.