Germany industrial group Siemens AG and France's Alstom SA on Tuesday announced plans to merge their rail operation businesses, in a move seen as an industrial breakthrough for French President Emmanuel Macron.

The merger of the two rivals will tie together the iconic French TGV and German ICE high-speed trains, along with each group's signaling and rail technology arms.

The newly forged entity will boast more than 15.3 billion euros ($18 billion) in turnover and earnings of up 1.2 billion euros before interest and taxes.

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The framework deal will see Siemens own 50 percent of the shares while Alstom will install its CEO, Henri Poupart-Lafarge, as the head of the new company. The new entity's global headquarters, rolling stock business and stock market listing, to be called SiemensAlstom, will be in Paris, while the signaling and technology arm of the company will be based in Berlin.

Siemens said it expects to make savings of up to 470 million euros ($550 million) by the fourth year of the merged company's operation, which is expected to begin at the end of 2018.

Although the deal still had to be approved by Alstom shareholders, the companies said it had received the unanimous backing of Alstom's board, Siemens' supervisory board and Alstom shareholder Bouygues, another French industrial group.

Countering China's advances

In a statement issued by Siemens and Alstom, the firms said the new rail company's global presence will help it gain access to key growth markets in the Middle East, India and China, as well as in the United States and Russia.

"We are putting the European idea into practice and, together with our friends at Alstom, we are creating a new European champion of the railway industry in the long term," Joe Kaeser, Siemens president and CEO, said in a statement.

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However, Tuesday's merger mainly comes in response to a similar deal in China that saw its two largest state-owned train manufacturers come together to forge the giant CRRC in 2015.

The Chinese rail company has already ventured into Europe, winning projects in Britain and the Czech Republic. It is also reportedly eyeing the UK's High Speed 2 project, a large rail network that will connect London with cities in the north of England.

As a result, Europe's rail companies have been facing significant competitive pressures. Kaeser has repeatedly pushed for greater cooperation among Europe's rail companies, and given the scale of CRRC, he said there was little room for regulators to oppose the Siemens-Alstom deal.

French backlash

While the French government has come out in support of the deal, several opposition lawmakers and trade union activists have voiced their apprehension. Most concerns have centered on the risk of France losing control of a national industry by handing its TGV trains over to a German company.

French right-wing politician Nicolas Dupont-Aignan and far-right National Front Secretary-General Nicolas Bay both decried the deal as being more favorable to Germany, while Eric Woerth of the right-wing Republicans posted on Twitter: "Is this now the end of Alstom? Will TGV become German? Why does the government accept such an imbalance?"

A branch of the CFDT trade union, which represents Alstom workers, accused President Macron of abandoning the French industrial giant.

However, in a statement to news agency Reuters, analysts at Exane BNP Paribas, a French investment bank, said the merger would offer better growth prospects to Alstom than if it remained a standalone company and that "value creation would be limited for Siemens but material for Alstom."

Germany's latest ICE high-speed train King of the rails DB boss Rüdiger Grube unveiled the new train in Berlin. The ICE is one of Germany's best-known brands. DB says surveys indicate 100 percent name recognition for its flagship high-speed rail service. The ICE accounts for only around 8-10 percent of sales, but it lends prestige to DB's brand.

Germany's latest ICE high-speed train The newest model The public saw the ICE 4 (on the right) for the first time in Berlin last December. It stood alongside a current-generation ICE 3. The new model will enter testing this autumn. The ICE 4 ist just under 350 meters long and has 830 seats.

Germany's latest ICE high-speed train Roomy inside DB could have easily fit 1,000 passengers on the train - but it decided to emphasize passenger comfort. It offers more legroom, space for luggage, and extra places for wheelchair users.

Germany's latest ICE high-speed train Energy saver Despite its high speed and capacity, the train is relatively quiet. Energy consumption per passenger is 22 percent lower than the first-generation ICE a quarter of a century ago. But its top speed is 250 kilometers per hour - 50 km/h less than the ICE 3 - as it's not intended for use on the very fastest routes.

Germany's latest ICE high-speed train Illustrious predecessor The Trans Europ Express (TEE) network set the standard for express trains in Western Europe when it was set up in 1957. The exclusively first class service ran for 30 years. Shown here is the West German "Rheingold" TEE train.

Germany's latest ICE high-speed train Tourist attraction This is how the "Rheingold" looked on the inside - this is the restaurant car. Tourists and rail fans alike can still experience this 1960s luxury today on nostalgia rail trips.

Germany's latest ICE high-speed train Flying trains Faced with competition from cars and planes, German railways in the 1930s increasingly used diesel trains instead of steam. The aerodynamically styled "flying trains" entered service in 1933 and drastically cut journey times. A new passenger service was formed that evolved into today's ICE network.

Germany's latest ICE high-speed train Fast as lightning The first tests of fast electric trains began in 1903. A Siemens railcar reached 210 kilometers per hour on a test track near Berlin. But development didn't begin in earnest until after World War I.

Germany's latest ICE high-speed train International competiton France's TGV (Train à Grande Vitesse) has been in operation since 1981. It holds numerous speed records, with the AGV version reaching a whopping 574 kilometers per hour in 2007. (In service, top speed is 320 km/h.) It's been an export hit, with TGV-based trains in Germany, Belgium, Britain, Switzerland and Italy.

Germany's latest ICE high-speed train From Beijing to Shanghai at 380 km/h The fastest rail line in commercial service is in China - Between Beijing and Shanghai, trains reach 380 kilometers per hour. A Velaro Harmony CRH 380A trainset reached 486 km/h during testing in 2010.

Germany's latest ICE high-speed train Number one with a bullet Japan's Shinkansen, sometimes called the "bullet train," was the first modern high-speed train. It entered service in 1964, in time for the Tokyo Olympics, with a service speed of 210 kilometers per hour. Today's models are even faster, reaching 320 km/h.

Germany's latest ICE high-speed train No pressure The Hyperloop is a California-designed concept for a high-speed train that could reach over 1,200 kilometers per hour. It would travel through specially built partial-vacuum tubes to reduce wind resistance. Air jets would lift it off the floor, eliminating wheel friction. Author: Klaus Ulrich / sgb



dm/cmk (Reuters, dpa)