MUNICH/FRANKFURT - German industrial group Siemens is likely to decide on Tuesday to pursue a multibillion-dollar rail merger with French rival Alstom rather than Canada's Bombardier (BBDb.TO), two sources familiar with the matter told Reuters.
The three major European train and rail technology groups have been looking at combining their businesses as larger Chinese state-backed rival CRRC embarks on a global expansion.
"I think Alstom will make it," one of the people said on Monday. The second person said the Siemens' supervisory board would decide the matter on Tuesday, also describing Alstom as the frontrunner.
A Siemens spokesman declined to comment, as did Bombardier. Alstom was not immediately available to comment.
The Franco-German deal would come just as plans by German Chancellor Angela Merkel and French President Emmanuel Macron for closer integration may be undermined by Merkel's weak showing in Sunday's national election.
It would also represent a reconciliation of sorts between Siemens and Alstom, which snubbed the German company in 2014 to sell its energy division to General Electric (GE.N) in a deal that also saw Paris take a 20 per cent stake in Alstom.
Siemens is expected to hold just over 50 per cent of the shares in the intended joint venture, while the chief executive would come from Alstom.
The combined business would have sales of about 15 billion euros (US$18 billion). That compares with CRRC's sales of 230 billion yuan (US$35 billion) and market value of US$40 billion.
The decision would be a blow for planes-and-trains maker Bombardier, which faces a separate battle this week to protect aerospace jobs in Quebec and Northern Ireland amid a subsidy row with Boeing (BA.N).
Bombardier shares fell sharply on Friday after a report that Siemens was in advanced talks with Alstom. They were trading down seven per cent in morning trading Monday.
Siemens shares were up 0.6 per cent by 6.05 a.m. ET on Monday, while Alstom shares were up 0.2 per cent.