BERLIN (dpa-AFX) - Siemens (SIEGY, SMAWF) and Alstom (AOMFF.PK, ALS.L) have signed a Memorandum of Understanding to combine Siemens' mobility business including its rail traction drives business, with Alstom. Siemens will receive newly issued shares in the combined company representing 50 percent of Alstom's share capital on a fully diluted basis. The corporate name of the combined group will be Siemens Alstom.
The new entity will benefit from an order backlog of 61.2 billion euros, revenue of 15.3 billion euros, an adjusted EBIT of 1.2 billion euros. In a combined setup, Siemens and Alstom expect to generate annual synergies of 470 million euros latest in year four post-closing and targets net-cash at closing between 0.5 billion euros to 1.0 billion euros.
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.
As part of the combination, Alstom existing shareholders at the close of the day preceding the closing date, will receive two special dividends: a control premium of 4.00 euros per share to be paid shortly after closing of the transaction and an extraordinary dividend of up to 4.00 euros per share to be paid out of the proceeds of Alstom's put options for the General Electric joint ventures of about 2.5 billion euros subject to the cash position of Alstom.
Siemens will receive warrants allowing it to acquire Alstom shares representing two percentage points of its share capital that can be exercised earliest four years after closing.
'By combining Siemens Mobility's experienced teams, complementary geographies and innovative expertise with ours, the new entity will create value for customers, employees and shareholders,'said Henri Poupart-Lafarge, Chairman and Chief Executive Officer of Alstom SA.
The Board of Directors of the combined group will consist of 11 members and will be comprised of 6 directors designated by Siemens, one of which being the Chairman, 4 independent directors and the CEO. Henri Poupart-Lafarge, will continue to lead the company as CEO and will be a board member. Jochen Eickholt, CEO of Siemens Mobility, shall assume an important responsibility in the merged entity. The corporate name of the combined group will be Siemens Alstom.
The transaction is unanimously supported by Alstom's board and Siemens's supervisory board. Bouygues fully supports the transaction and will vote in favor of the transaction at the Alstom's board of directors and at the extraordinary general meeting deciding on the transaction to be held before July 31, 2018, in line with Alstom board of director decision.
The French State also supports the transaction based on undertakings by Siemens, including a standstill at 50.5 percent of Alstom's share capital for four years after closing and certain governance and organizational and employment protections. The French State confirms that the loan of Alstom shares from Bouygues SA will be terminated in accordance with its terms no later than October 17, 2017 and that it will not exercise the options granted by Bouygues. Bouygues has committed to keep its shares until the earlier of the extraordinary general meeting deciding on the transaction and July 31, 2018.
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 euros break-fee.
The transaction is 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.
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