November 14, 2018 / 9:17 AM / 7 months ago

Alstom says Siemens rail deal on track for next year

FILE PHOTO: French High Speed Train (TGV) made by French train maker Alstom stops next to a German High Speed Train (ICE) made by Siemens at Munich's railway station June 16, 2014. REUTERS/Lukas Barth/File Photo

PARIS (Reuters) - France’s Alstom (ALSO.PA) voiced confidence it would finalize a merger with Siemens’ railway business by the middle of next year despite an investigation by European authorities as it reported a big rise in first half profit.

Germany’s Siemens (SIEGn.DE) and Alstom, the maker of the TGV high speed train, agreed last year to merge their rail operations. The aim is to create a European champion to challenge the advance of China’s state-owned CRRC (601766.SS), although the deal is facing regulatory scrutiny.

The French and German companies may agree to sell some assets to get the deal past anti-trust regulators who have raised a series of objections.

“Alstom and Siemens continue to work constructively with the European Commission to explain the rationale and the benefits of the proposed combination,” the company said in a statement.

“Alstom and Siemens will now discuss the specific concerns of the Commission and will ensure that they are addressed in a timely manner,” added Alstom.

Alstom said first-half net profits surged to 563 million euros ($636 million) from 177 million euros a year earlier, buoyed by new contracts such as ones in Dubai and Mumbai.

The higher profits and Alstom’s reassuring words on the Siemens deal pushed shares in the French company 2.5 percent higher by 0855 GMT.

“We continue to like the structural growth story in rail combined with potential to realize significant cost synergies through the planned merger with Siemens Mobility, but see higher regulatory risks at this stage than previously anticipated,” wrote Barclays analysts in a note.

Reporting by Sudip Kar-Gupta; Editing by Inti Landauro/Keith Weir

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