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Rep. John Garamendi (D-Calif.) on how President Trump demanded that California pay back the federal government for scaling back its plan to build its $3.5 billion high-speed train project and the president’s push for a border wall.
PARIS/MONTREAL — France's Alstom has agreed to buy the rail division of Canada's Bombardier
for up to $6.7 billion to create the world's No. 2 train manufacturer and better take on Chinese
leader CRRC Corp.
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The cash and shares deal, announced on Monday, is the latest attempt by Western rail firms to try to build scale.
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Alstom, the maker of TGV bullet trains that speed between French cities such as Paris and Nice, was blocked last year from merging with Germany's Siemens by European regulators, who argued the deal could penalize consumers.
The agreement between Alstom and Bombardier would unite companies with an estimated $17 billion in combined revenues.
The French firm said the two were complementary geographically, adding Bombardier's European's footprint was stronger in northern countries and the Canadian firm would add expertise in monorail trains as well as rail services.
“We don't see it as a huge issue,'' Alstom Chief Executive Henri Poupart-Lafarge said of regulatory hurdles on a conference call. “If there are some issues, they will much easier to solve
than the one we had with Siemens."
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A combination with Bombardier would give Alstom a share of between 40 percent and 60 percent of the European regional train market, according to estimates cited by union sources in France, well
above Siemens at 10 percent to 20 percent. Some analysts have said there could be less opposition to a deal this time as Alstom and Bombardier have a lower combined European market share in high-speed rail and signaling.
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The French government, which had criticized the EU's veto on the Siemens merger, welcomed the transaction.
“This deal will allow Alstom to prepare for the future, against the backdrop of increasingly intense international competition,'' Finance Minister Bruno Le Maire said, adding he was due to discuss it with the EU's antitrust boss Margrethe Vestager on Tuesday.
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Bombardier and Alstom said they expected the deal to close in the first half of 2021.
Under the deal, one of the Bombardier rail division's shareholders, Canadian pension fund Caisse de depot et placement du Quebec, would become the lead investor in Alstom with an 18 percent
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