Bombardier denies Siemens rail merger rumors

The Canadian train and aircraft manufacturer in May outlined plans to list a minority stake in its rail business, but Chief Executive Alain Bellemare denied the company was considering selling the entire unit.    Canadian train and aircraft manufacturer Bombardier Inc. is denying reports from the Wall Street Journal it has held initial meetings to discuss merging its rail unit with that of German conglomerate Seimens AG.
   According to the Wall Street Journal, Siemens AG Chief Executive Joe Kaeser said Thursday that he recently met with Bombardier Executive Chairman Pierre Beaudoin, but that the two “did not discuss business.” Kaeser did note, however, that in the rail manufacturing industry, “definitely there is movement and consolidation in that market going forward and we definitely will be very mindful of what can be done there.”
   WSJ reported last week that the two companies met to assess the viability of merging their train units, each of which rank among the largest in the world. Earlier this year, industry analysts speculated that the company might combine its rail equipment business with that of the French energy and transport multinational Alstom. Then in May, Bombardier outlined plans to list a minority stake in its rail unit, headquartered in Germany, on the Frankfurt Stock Exchange, but Chief Executive Alain Bellemare denied the company was considering selling the entire train business.
   Analysts estimate an acquisition of Montreal-based Bombadier’s rail operations would be valued at around $5.1 billion. Some are concerned, however, that any merger or acquisition between the rail units of Bombardier and either Siemens or Alstom could struggle to gain approval from the relevant European regulatory authorities.
   “We think that such a merger would face a significant regulatory hurdle in Europe as both Bombardier Transportation and Siemens Mobility are large players in Europe,” said Scotiabank analyst Turan Quettawala in a client advisory note quoted in an article by Reuters. “A merger would also likely lead to significant layoffs in Europe, which may be a concern for governments.”
   Bombardier’s transportation unit reported revenues of $9.6 billion in 2014, while Siemen’s mobility segment posted revenues of 7.2 billion euros (U.S. $8 billion), about 85 percent of which is attributable to the rail division, according to a calculation by an analyst at J.P. Morgan.
   Siemens has declined to comment on the merger reports.