September 28, 2017
Siemens and Alstom have signed a Memorandum of Understanding to combine Siemens' mobility business including its rail traction drives business, with Alstom. The transaction brings together two innovative players of the railway market with unique customer value and operational potential. The two businesses are largely complementary in terms of activities and geographies. Siemens will receive newly issued shares in the combined company representing 50 percent of Alstom's share capital on a fully diluted basis.
The new entity will benefit from an order backlog of €61.2 billion, revenue of €15.3 billion, an adjusted EBIT of €1.2 billion and an adjusted EBIT-margin of 8.0 percent, based on information extracted from the last annual financial statements of Alstom and Siemens. In a combined setup, Siemens and Alstom expect to generate annual synergies of €470 million latest in year four post-closing and targets net-cash at closing between €0.5 billion to €1.0 billion. Global headquarters as well as the management team for rolling stock will be located in Paris area and the combined entity will remain listed in France. Headquarters for the Mobility Solutions business will be located in Berlin, Germany. In total, the new entity will have 62,300 employees in over 60 countries.
In France, Alstom and Siemens will initiate Works Councils' information and consultation procedure according to French law prior to the signing of the transaction documents. If Alstom were not to pursue the transaction, it would have to pay a €140 million break-fee. The transaction will take the form of a contribution in kind of the Siemens Mobility business including its rail traction drives business to Alstom for newly issued shares of Alstom and will be subject to Alstom's shareholders' approval, including for purposes of cancelling the double voting rights, anticipated to be held in the second quarter of 2018. The transaction is also subject to clearance from relevant regulatory authorities, including foreign investment clearance in France and anti-trust authorities as well as the confirmation by the French capital market authority (AMF) that no mandatory takeover offer has to be launched by Siemens following completion of the contribution. Closing is expected at the end of calendar year 2018.
Latham & Watkins represents Siemens in the transaction, with a corporate team led by Paris partners Patrick Laporte and Pierre-Louis Cléro and Munich partner Rainer Traugott, with Paris partner Jean-Luc Juhan and associates Semih Bayar Eren, Julie Cazalet, Elise Pozzobon in Paris, and Stephan Hufnagel and Jeremias Bura in Munich. Advice was also provided on tax matters by Paris partner Xavier Renard and Munich partner Thomas Fox, with Paris associate Yann Auregan; on employment and benefits matters by Paris partner Matthias Rubner and Munich partners Claudia Heins and Tobias Leder, with Paris associate François Proveau and Munich associate Kristina Steckermeier; on IT matters by Hamburg counsel Christian Engelhardt; and on regulatory matters by Paris partner Hugues Vallette Viallard and Frankfurt counsel Joachim Grittmann.
The Siemens legal team was led by General Counsel Andreas C. Hoffmann, Chief Counsel Corporate M&A Anton Steiger, Head of Legal M&A Energy Christian Zentner, and Senior counsels Christopher Strehle and Steffen Foehr.