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Siemens AG and Bombardier Inc. are in talks to combine their train operations, people familiar with the matter said, potentially creating a business that could better compete with rising competition from China.

The proposed joint venture, which could be worth at least 10 billion euros (US$10.6 billion), would merge the firms’ train-making and signaling activities, said the people, asking not to be identified because the discussions are private. A deal could come by the middle of the year, one of the people said.

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No final decisions have been made and any combination would require clearance from antitrust authorities and face potential opposition from unions, they said. Representatives for Siemens and Bombardier declined to comment.

Analysts from Societe Generale SA have valued Siemens’s mobility unit at about 7.2 billion euros, while Veritas Investment Research Corp. has said Bombardier’s 70 per cent stake in its transportation business is worth at least US$5 billion.