All Aboard

[Guest]

Germany and France are putting their rough past behind them: Siemens (+1.20%)(Germany) is merging its rail business with locomotive producer Alstom (France) to form one united (and very large) European rail company. Mi scusi? 

Siemens will be the conductor, taking a majority stake in the newly-formed company that expects to post $18 billion in annual sales. It’ll also exploit synergies in R&D and manufacturing to save more than $550 million over four years. 

And every penny counts, now more than ever. Across the world, large industrial companies are linking up in the face of intense Chinese competition. First it was steel (ThyssenKrupp and Tata Steel, remember?). Now it’s rail. This new European giant plans to take on the largest train supplier in the world, China’s CRRC, that’s making other rail companies look like Thomas the Tank Engine. 

The leaders of both companies claim the deal is all business, no politics. But…we’re thinking it’s both.