Blocked merger between Siemens and Alstom a win for Bombardier, say analysts

Analysts say Bombardier Inc. can rest a little easier after European antitrust authorities blocked a plan by manufacturing giants Siemens and Alstom to merge their rail operations.

A small reprieve for mass transit giant Bombardier as European courts block a merger between Siemens and Alstom. Photo by Mike Stephan via Wikimedia Commons.
A small reprieve for mass transit giant Bombardier as European courts block a merger between Siemens and Alstom. Photo by Mike Stephan via Wikimedia Commons.

The European Commission announced its decision Wednesday to bar Siemens of Germany from acquiring the French Alstom’s train-making business, arguing it could reduce competition in the signalling and high-speed train markets.

The deal would have created a $22.5-billion company with more than 60,000 employees, versus Bombardier’s US$8.5 billion in train unit revenues in 2017.

Analyst Cameron Doerksen of National Bank Financial says that while the scuppered merger would have given the combined company a “dominant position” in Europe, Bombardier would have remained a “top-two player” in the key markets of Germany, France and the U.K.

Still, he and other analysts say the deal may have reduced opportunities for the Berlin-based division of Bombardier Inc. to team up on contract bids with Siemens and Alstom and hurt its prospects in the market for rail signalling systems. Bombardier stocks were up five per cent to $2.03 in midday trading.

Bombardier says it is pleased” with the European Commission ruling and states that such a big merger would have damaged competitiveness and left European consumers and taxpayers paying the price.

You might also like

Leave A Reply

Your email address will not be published.