Derby train-maker Bombardier has remained tight-lipped on fresh speculation claiming that it is in the “final stages” of talks to combine its rail operations with rival Siemens.
According to the news agency Reuters, “several sources familiar with the matter” claim the deal would create two separate joint ventures for their signalling and rolling stock divisions.
One of the sources claimed that Bombardier, which has its UK train manufacturing plant in Litchurch Lane, would take a majority stake in the joint rolling stock operations, while other sources said Siemens would take roughly an 80% stake in a joint venture in the signalling business.
If rumours of the proposed merger are true it would firmly establish the combined business as the world’s second biggest train-maker – big enough to compete with growing competition from China, in particular, the state-backed company CRRC.
Both companies would need to prove that there would not be job losses as a result of a merger
But both Bombardier and Siemens have declined to comment on the speculation.
However, Reuters’ unnamed sources claim that a deal could be announced as early as August. They said that Siemens’ supervisory board will discuss the matter at a meeting on August 2, while Bombardier’s board is expected to consider it before the company reports its second-quarter earnings this week.
It is not the first time that there has been speculation over a possible Bombardier/Siemens merger. In April, media reports suggested that Bombardier and Siemens had explored joining forces. Again, at the time, both companies did not comment.
And back in July 2015, a report in the Wall Street Journal claimed that Bombardier Inc – the parent company of the firm’s rail division – was in discussions with Siemens. At the time, Bombardier denied that talks had taken place.
Bombardier’s Litchurch Lane plant is busy delivering trains destined for the Elizabeth Line
Any merger between the two would face tough scrutiny from competition regulators and each company would need to offer assurances that a tie-up would not result in job losses.
In the past, Bombardier, which employs around 1,600 people in Derby, has competed against Siemens for a number of high-profile contracts, particularly in the UK.
In 2011, Siemens controversially pipped Bombardier to the £1.6 billion Thameslink contract – but three years later Bombardier won the £1 billion Elizabeth Line (formerly Crossrail) deal ahead of the German company.
In particular, the Derby plant has enjoyed a fruitful last 12 months during which the first Elizabeth Line train has entered service, while the firm has landed major deals – a £1 billion contract to supply trains for the new East Anglia franchise and a £900 million deal to make trains for the new South West Trains franchise.
Siemens employs 700 train workers in the UK and its contracts include supplying Eurostar trains.
Source: Derby Telegraph