By Foo Yun Chee
BRUSSELS (Reuters) - France's Alstom SA (PA:ALSO) clinched EU antitrust approval on Friday to acquire Canadian rival Bombardier (OTC:BDRBF) Inc's (TO:BBDb) rail business in a deal that will elevate it to the world's second-largest rail maker after China's CRRC Corp (SS:601766).
Alstom's success in gaining EU clearance for the deal valued up to 6.2 billion euros ($7.4 billion) contrasted with its failed attempt last year to combine its rail assets with Siemens AG (DE:SIEGn), which was vetoed by regulators because the companies refused to offer more concessions.
"Thanks to the comprehensive remedies offered to solve the competition concerns in the areas of very high-speed, mainline trains and mainline signalling, the Commission has been able to speedily review and approve this transaction," European Competition Commissioner Margrethe Vestager said in a statement.
The Commission said Alstom will sell a French rail factory in Reichshoffen, its regional train unit Coradia Polyvalent, and a Bombardier commuter trains division and related production facilities at its Hennigsdorf site in Germany.
The company also agreed to sell Bombardier's stake in a consortium with Hitachi (T:6501) and provide access to some products within Bombardier's train control systems and signalling units to rivals.
Alstom said it expects to complete the deal in the first half of 2021.
French Finance Minister Bruno Le Maire welcomed the EU green light.
Bombardier said: "Today's decision marks a positive step for the growth opportunities of the European rail sector, which is a world leader thanks to strong domestic competition and commitment to the next generation of green and digital mobility solutions."
Siemens said it was reviewing the decision and would decide in due course about further action.
Alstom’s Force Ouvriere union said the operation was financially risky and aimed only at becoming bigger, even if it meant some parts of the company had to be cut off.
Reuters reported on July 27 that the concessions would help Alstom gained EU clearance for the deal.