by BLOOMBERG

FRANKFURT • Siemens AG and Alstom SA are nearing an agreement on a framework to combine their rail units, as the German and French engineering companies’ boards prepare to meet to sign off on a deal that would create a European transportation giant, according to people familiar with the negotiations.

Siemens, based in Munich, is likely to own slightly more than half of the combined entity, said the people, who asked not to be identified ahead of a potential announcement as early as yesterday after the separate board meetings. The new business will be based and listed in France and will be run by a French CEO, the people said. The French government, which owns a stake of about 19.9% in Alstom, has backed the accord, one of the people said.

Siemens and Alstom, which confirmed last week that they are engaged in preliminary talks to combine their mobility subsidiaries, have declined to comment. Siemens shares fell 0.5% to €116.05 (RM575.72) at 9:07am in Frankfurt yesterday, while Alstom rose 1% to €33.75 in Paris.

Combining the two assets would give Siemens and Alstom more heft to confront growing competition from China. In creating the world’s secondlargest maker of rail cars and locomotives after China’s CRRC Corp, a European tie-up would also scuttle months of talks between Siemens and Bombardier Inc and represents a new hurdle for the Canadian company’s turnaround plans.

The enlarged entity is likely to be named Siemens-Alstom, two of the people said. — Bloomberg