Business Combination

Sep 27, 2017

Ladies and gentlemen, welcome to the Alstom Conference Call. Today's conference is being recorded. I now hand over to Henri Pappard Lafarge. Sir, please go ahead. Good morning, ladies and gentlemen. Good morning. Welcome to this conference call on the creation of a global leader in mobility. And I'm extremely pleased to present to you our new project. It's an extremely exciting time. And I will just summarize the proposed transaction. I will present the new company and then Marie Jose with me today. Will go through the transaction terms and then we'll be open for Q and A with Selma. So basically what has been announced yesterday night very simply the signature of the memorandum of understanding for the combination of the mobility businesses, both of Cement and Alstom. It will be a group which will be listed in France, in Paris, at quarters in Paris, which will be led by the Alstom current CEO and 50% of the shares on a fully diluted basis will be owned by Cement. Clearly, this is a deal that we were expecting. This was our main priority, which we were looking for, for a long period. And the basic reason behind this priority and why we saw that this was the best deal we could do was basically because of the complementarities between the two companies. Complementarities in terms of industrial footprint, complementarities in terms of customer base, also complementarity in terms of know how. We are more global in our footprint. Cement is more digital oriented as a better expertise in digital technologies. So the combination of the 2 was actually ideal and this is why we are so happy today. So excited because this is really something that the ex com of Astom, the Board of Astom was looking for a long time. The combined entity will be a global leader, as I said, revenues of €15,300,000,000 and an adjusted EBIT of €1,200,000,000 The deal in itself will bring some synergies and we have estimated both Cement and ourselves together that the EBIT synergies will amount to €470,000,000 after 4 years. Of course, it takes some time to implement the synergies. But this is a deal which will create undoubtedly a lot of synergies in addition I would say to the strategic intent. For Maisonie, we'll come back on the transaction terms, but we'll take this opportunity also to clear our balance sheet issues and particularly what would be what we would do with the proceeds of the GE put, the so called GE put. And we will distribute up to €8 per share of dividend to our shareholders and Max Zener will explain how it fits in the valuation of the transaction. So in a nutshell, this is today is the day we were all waiting for since a while. You remember that I talked a number of time about consolidation. I always said there was no do or die type of deal and I mean it. And the deal which we do is not a defensive deal. It's definitely an offensive one and it's to grasp this fantastic opportunities, which has risen. The rest of the presentation, you probably already know the upstream overview. I mean, you know the Axsome overview, we have a backlog of €34,800,000,000 sales of €7,300,000,000 with a split a little bit more less than half of rolling stock, then signaling services and systems being equally sharing the second half of our business, 32,800 employees. Siemens is actually quite similar in size to Cement Mobility, quite similar in size to Alstom. Just as a precision, the deal includes the full Cement Mobility division, all the activities of Cement Mobility, but also include the traction drive, which today are in Cement's industrial segment, so that it's not managed by Cement's Mobility, even though the numbers are going through Cement's Mobility as well in terms of turnover. So Cement, you know as well as much as I've said, the split of activity is similar except for signaling, which has a higher weight in cement mobility as we know and this is one of the reasons why we are so excited by the deal. And system and the services probably a little bit smaller in their activities. The different business model and with higher proportion of signaling makes the backlog of cements, I mean, mechanically lower. So what would be the new companies look like? So first of all, I'll come back 1 minute on the rationale. Seven basic reasons. I will go through each of it each of them, sorry. The first, of course, is a creation of a global leader. You know that there are 2 basic trends in our industry. One is globalization. You know that over the last 10 years, our industry has globalized. We have now our markets have globalized. All the cities around the world have urban projects. This also has given birth to a number of global players coming from other parts of the world than Europe. So that's is a globalization of the industry and we have pursued the globalization ourselves and of course this deal will enhance this globalization. So it's really the global leader creation. The second trend of our industry is digitalization and the fact that beyond the pure rolling stock, the optimization of the system or the efficiency of the system is absolutely instrumental to the future of the transport. And also the global leader of size will enable us to invest more in these technologies than we were capable of doing alone. So 1, first is on the global leader. It's not a global leader which is made of 2, I would say, 2nd tier players. It's clearly a global leader made of 2 very first ranked company. So very renewed brand, complementary portfolio. Clearly, as I said at the beginning, a very nice fit in terms of portfolio. Industrial footprint is also very complementary. We will cover the 5 continents very nicely. Without going into the in detail, you know, for example, that we have a large footprint in India. Cement is probably more present China. We have some footprint in Africa. We are complementing each other probably in the U. S. Where we are more in the East Coast, Siemens is more on the West Coast. So if you look physically, you will see that we are now covering the full globe very, very nicely. As I said, this global leader is not a question of size, only a question of size, it's not only a question of geographies, it's also a question of innovation, of R and D capabilities, digital innovation. And on that front, clearly, the combination of our forces will put us in a very good position to offer new solutions to our customers and ultimately, of course, to the passengers. The 5 the 5th one is a more subtle one, but I really like it a lot. I think having gone for the last 20 years in Alstom, I think if we can combine and we will combine the beauty of being a stand alone business with the agility of a stand alone business, the fact that everybody around the table works on the same sector, knows exactly the same market, is extremely knowledgeable of the same market. And at the same time, benefiting from a strong shareholder, a strong group, that is the goal. And that is what we will propose today. And at the same time being a standalone business listed with its own dynamism, but at the same time being part of the Siemens Group. And Siemens Group will bring to us financial capabilities, will bring to us technological capabilities, notably thanks to their large digital platform. So we'll combine the best of the 2 worlds. 1, the agility and the dynamism of a pure player and the umbrella of a large and extremely renewed group. This deal, I think, will create a lot of value for our shareholders, for our existing shareholders and for our future shareholders, shareholders of the new companies with the synergies. And of course, that but not this, it has a strong financial profile. We have the target of having a company which is really standalone on that respect, to have a balance sheet which allows this company to make any strategic move or any investment that we would like. I've been long enough in that term to know that we are in the project business and we can only be sustainable with a strong balance sheet and I will not deviate from that and that's why we are targeting a balance sheet of more than €500,000,000 of net cash, which I think is something which is necessary for the company going forward. So again, in a nutshell, an extremely exciting move and something that we were looking for a long time and which comes in an ideal manner. Just a reminder of what has happened. You know and it will illustrate the consolidation. We, in the past, participated to the consolidation of the industry. Cement has participated to the consolidation industry. But it's fair to recognize that what we do today is one step beyond all what was done in the past. Some details on the complementaries of the portfolio. Just to tell you that not only we are complementary on a global base, but also product by product. If you look at the rolling stock, Cement has a Vectron, which is extremely successful in terms of local, they are high floor, tramways for example. So even if you look at the details, you will see that the portfolio is very complementary. It's not a surprise because in our business, the product portfolio goes together with the geography. And as we are complementary in terms of geographies, it's not a surprise that we are complementary in terms of product portfolio. Signaling, I think here as well, I mean, there is a strong lead between the geographies and the signaling because even though you have the ARPMS, which is of course a European based signaling system, you have also local system, local interlocking for which we have different solutions. Services is a very, I would say, locally based business. So we are servicing a different type of contracts for our own fleet and own base. On system, I think here as well, I mean, this is we are complementing our 2 expertise on systems with both of us. We have a system capabilities, But here, I would say that size matters. I mean, we need to have this is a business which is based upon expertise and we need to have the best experts on systems. So by combining forces, clearly, we'll have a strong, strong know how on that domain. Both of us who are working as well on outside the pure rail systems. It's fair to recognize that Siemens is more advanced in a number of areas in terms of smart highways. For example, we are example. We are both working on e highways, so we will combine as well our expertise on global mobility beyond the rail system. In terms of employees, I mean, this slide shows you that we are both in Europe and in the world. I said at the beginning, we were Astra was probably more global from its footprint standpoint. But still you have cement mobility all around the world as well. So now clearly, I was mentioning that a number of times in the past, we were seeking for critical side on all the continents, because I believe that we need to have critical size on all the continents to serve the local market. And clearly now with cement coming on board, we have this critical size. One word on this critical size. As I said, we have in the U. S, it's a very nice complement in Asia, a very nice complement. On signaling, we are in different cities. For example, clearly, cement is presenting much more than we are in Paris, in New York. So very prominent cities, which will add to our portfolio of cities. Services, as I said, number of different footprints and again systems. We are of course in different systems. Innovation extremely important. There are some nice innovations. Some of them are parallel and will enrich all our portfolio. Some of them are really complementary. I mean, we have launched our hydrojein technology. As you may just launch a new Miro train. We are both working on predictive maintenance and here we are kind of joined force to offer sooner than later some solutions on predictive maintenance. On data analytics, where Cement is particularly advanced. We have worked on connectivity, thanks to the acquisition of Nomad and they have also a solution there. So smart parking, this is what something that Cement is bringing on the table, as I said, some smart mobility beyond the rail transportation. Cooperation with the rest of Siemens Group, very important for us. I mean, we are so pleased to join such a powerful group, both in terms of divisions with Energy Management, so traditional T and D products, process industries and drives. And we are putting in the perimeter traction, but still we want to keep some synergies with the rest of the drive business, digital with the Mindfair, which is a digital platform of Cement and as I said financing. Clearly, Cement has financing capabilities, which will benefit from the NewCoop going forward. Synergies always very important that we have clearly looked at the different synergies. I think we were conservative on some areas because we know that it's always complex to extract the synergies from such a combination. So we've looked at first the procurement, which is the easiest one, which is the power bargaining power, I would say, the increased power, but not only win, I would say, win and lose type of relationship with our suppliers, but something much more interesting, which is a platforming to try to work with our supplier to find some standard of products and so forth. So a lot of work to be done there. SG and A, which is a simple one, which is of course all the structure as we are very complementary. We have also structures which can be combined and we can save a lot in structural cost. And of course R and D not that we want to decrease the R and D efforts, but by saving on some of the platform, we'll be able to redeploy some R and D efforts to other innovations, to new innovations to bring new things to the market. So it will enhance our R and D capabilities in order to bring new products to the market. And of course, some orders which will take more time to come through the P and L, all what is initial synergies and so forth. That will take more time obviously. We are as I said, this is value creating for our shareholders. There are 2 dividends which will be paid at closing, 1 which represents the control premium which is €4 per share and the second one which represents what we call an extraordinary dividend, which will be taken out of the put options in the energy denoucher, which means that as you can see, we are going to exercise these put options. As we don't know whether this put options or whether the cash coming from GE will come before or after the closing, because actually the net of these put options is end of September 2018. So of course, there is some uncertainty on whether the deal will be closed at that time. We would pay either before the at the closing or when we receive actually the amount from GE. So this second dividend is related or linked in time with the payment received from GE depending on whether it goes before or after the closing. So now I will hand over to Marie Jose, which will detail to you the transactions. Thanks. Okay. Good morning, everyone. So as described earlier, the transaction will take form of a contribution in kind of the Siemens Mobility business and Siemens will receive newly issued shares of the combined company, representing 50% of Alstom's share capital on a fully diluted basis. So as part of the combination, Alstom's existing shareholders, as mentioned by Andre, we received 2 special dividends. 1st, a controlled premium of €4 per share to be paid shortly after closing and second, an extraordinary dividend of up to €4 per share to be paid out of the proceeds of Alstom's put options. Each of those dividends represents roughly €3,900,000,000 So this transaction is unanimously supported by the Alstom Board and Siemens Supervisory Board. Bouygues fully supported this operation and will vote in favor of the transaction at the shareholders' meeting to be held next spring. The French state also supports the transaction. And as you can see on the bottom right of the graph, actually, the state has confirmed that the loan of Alstom shares from Bouygues will be terminated by end of October 2017 and that it will not exercise the puts the options granted by Bouygues. So let's go briefly through the valuation mechanism. So on the left, you can see Siemens Mobility value comprises Siemens Mobility division as well as its rail traction drives business, which is today part of its industrial power drive segment, as well as some pro form a adjustments on a stand alone basis. So after the payment of the control premium and debt like adjustments for pensions underfunding and project financing mainly, Siemens Mobility represents 50% of the combined entity. On the right, Alstom Value comprises its transport business, of course, as well as the 3 joint ventures in with GE on renewables, grid and nuclear. After payment of the extraordinary dividend, Alstom represents the other 50% of the combined entity. A snapshot of the governance. So the Board of Directors of the combined group will consist of 11 members. It will be comprised of 6 directors designated by Siemens, including the Chairman of the company and 5 directors designated by Arstom, including the CEO and 4 independent directors with specific rights. So, Henri Poupar Lafarge will continue to lead the company as a CEO and Board member. And the combined group will actually adopt Siemens Alfa as a corporate name. And it will have its headquarters in Paris area and will remain listed in France. Some figures. The new entity will benefit from an order backlog of €61,000,000,000 revenues over €15,000,000,000 and an adjusted EBIT of €1,200,000,000 which corresponds to an 8% margin. So this is based on the last actual figures of both businesses. In a combined setup, Siemens announced expect to generate annual synergies of €470,000,000 latest 4 years after the closing. And the new entity targets net cash at closing over €500,000,000 So overall, this represents, as you can see, a change in scale for the combined entity in terms of profit generation and cash flow generation that will support our future growth ambitions. Let's finish this presentation with an indicative timetable. So what's going to happen now after the signing of the MOU till the closing of the transaction? So Siemens and Alstom will initiate Works Council's information and consultation procedure according to the French law prior to the signing of the transaction documents. The signing of the business combination agreement is expected early 2018 and an extraordinary shareholder meeting deciding on the transaction will be held before July 2018. The deal is also subject to clearance from the relevant regulatory bodies, including the antitrust authorities mainly. Closing is expected end of calendar year 2018. Thank you very much for your attention. And I'm now the We'll take our first question from Simeon Tonneson from Berenberg. Yes. Good morning, everyone. Two questions, please. The first one, can you talk a bit about the sort of implementation costs that you're assuming around the business? Because obviously you heard a lot about the synergies now, but there's going to be some costs that you must be obviously targeting. Appreciate if it's a bit too early, but any indication there would be helpful. And secondly, the net cash target of €500,000,000 to €1,000,000,000 by the closing. Can you just walk us through a bit your thoughts here from the €200,000,000 net debt you have right now towards that. Does that include the cash you're assuming from the GE puts? Just a bit more rational and thoughts around this, please. Thank you. Thank you, Simon, on your two questions. The first one, we have estimated so far the implementation cost at around €250,000,000 So we made the analysis. One thing which is, as I said, quite good is indeed that all these numbers have been shared and I think this is a combined view or shared view of what would be the situation. But as you said, it's quite early. So these numbers need to be refined going forward. In terms of cash, you are right. This is, I would say, taking into account the cash coming from the joint ventures from GE. So as you have seen, there is the value analysis, which has been presented by Marie Jose, whereby the control premium is deducted from the value of the Cement Mobility to take into account to get to the fifty-fifty. But in terms of liquidity, this control premium and the dividend is also paid by the cash from the joint ventures. So that's why when you add we have today €200,000,000 of debt. If you add back the 2.5 €1,000,000,000 of dividend coming from or dividend of the dividend of the DIBUT, sorry, And then you deduct the €8 of dividend, you will get to something which is probably close to the number I was mentioning. And then you have the calculated in the year and so forth. In half term, if you take that these two numbers, you get to where I said. Okay. Thank you. We'll now take the next I just wondered if I could ask 2 questions, 1 on synergies and 1 on antitrust. I guess, synergies have often been thought to be notoriously difficult in the rolling stock industry. Is it that you think that the synergies can be greater on the signaling side than on rolling stock? And do you see the synergies principally coming from sort of fixed costs like SG and A and R and D or also from variable costs? Could you just perhaps give us a little color on the synergies please, Henri? And secondly, on the antitrust issues, I guess that's a risk. And I guess that if one were to look at global market shares, this deal will fly. And if we look at European shares, it may not. And it seems from the outside that some big political characters in France and Germany are in favor of this European deal. And do you think that that helps the odds of looking at this globally? Has there any commitment be made on that front? What can we say there? Thank you. Thank you. On the synergies, as I said, it's and you are right, it's the industrial synergies on the rolling stock side will not come extremely easily and will take time to implement industrial synergies. But at the same time, all what is structure and in particular also procurement, which will come very rapidly. So and procurement is, of course, related to the variable cost to take your point. So we have both variable costs through the procurement and we have, I would say, structural costs through the S and A. But your point is valid in terms of fixed cost in useful fixed cost, this will take more time to come definitely. This is for rolling stock. You're right. In terms of signaling and digital, I think the R and D portion will prevail. That will have also some sourcing, but clearly, R and D will prevail. The R and D content of the digital and signaling activities is, of course, much higher. And therefore, synergy will come more from the R and D content rather than from sourcing and also not from clearly not a lot from, I would say, this industrial setup because there are very few industrial setup in this business. I would also add the fact that, as you know, Astom has developed a low cost base in the past. We have a strong footprint in India, for example. And this effort to develop the low cost base will benefit in the future to both companies. So in terms of, I would say, even internal supply, I think both companies will benefit from low cost base, easy access to a low cost base, I would say. So that's something which we have not really factored in the synergies, which is a kind of change of the supply chain even internally. But that, of course, will be an element of synergies. In terms of antitrust, I mean, of course, this is a large deal. So no surprise, it will be looked quite closely by the European Commission. And no surprise as well, we are not entering into this deal without a thorough analysis, internal analysis of this topic. So if we go there, it's because we are confident that we'll find the solution with the Open Commission and this will not create too many dis synergies, but far from that. So that's where we are. And we need to have the process going on, but I can tell you that this has been looked at and we are confident. Next questions? We'll now take the next question from Martin Wilkie from Citi. Thank you. Good morning. It's Martin from Citi. You went through some of the reasons that there's not a huge overlap in geography. But if I look at the product portfolio, there are obviously some overlaps in high speed. You're developing the next generation AGV, Siemens, Helens, Velaro. Is there going to be a consolidation of the product portfolio or do you think the new enlarged company will still require essentially what is currently offered? Just to think about sort of what synergy you might get over time from consolidating the product offering? Thank you. No, I think our product portfolio and our platforms is made out of sub elements and subsystems and bricks. So we'll have more bricks to make more combinations and in order to offer a more diverse portfolio. If you take the high speed and the very high speed, which may seem, as you said, the obvious overlap, the reality is that we are, as you know, in Europe on double deckers and on push pull type of various speed technology, whereas cement with a Valero is on distributed power and single deck. And it serves different type of markets. And to be fair, we are not competing so much directly against one each other. For example, in Turkey, cement was qualified. We were not because we had a double deck and they didn't want to push pull and so forth. So it's I see it more of course, we'll have to unify platforms with standard subsystem and so forth. But it will enrich the spectrum of the different possibilities that we will have and the different products that we could offer to the market. So there will be rationalization, but the platforms will be as for example, tramway, I mean, as in Apple, tramway, we have a platform. We have low floors, cements as high floor of tram, which is not a surprise because we are only on the new networks, where cement was more present on the German or the Eastern Europe network, which is an old network made of high floor frames. So here as well, we are going to make a common platform, of course, of high and low floor or low floor frames made of components from both companies. So there will be a convergence of the platforms. Okay. Other questions? We'll now take the next question from James Stettler from Barclays. Yes, good morning. Thank you for taking my questions. Just on the shareholding in your presentation, it's fifty-fifty in the Siemens presentation, it's 50.6%. Can you just clarify how that will be post deal? Also, is it possible to get a breakdown revenues? I know you give the sort of charts in there, but could you actually give us the sort of pro form a breakdown by the 4 segments? And then finally, just in terms of management continuity, also from the Alstom side, can you talk a bit about how these contracts are set? Thank you. Yes. On this 50.3 percent, actually what I said is that the shareholding is structured as a 50% on a fully diluted basis. So taking into account all potential issuances of shares through stock options and free shares. So at termination debt, which is a debt where we fix everything, indeed Cement will have 50 point 67 50.67 at the time. And then of course, it's we are a listed company, so then it fluctuates depending on the number of shares which are issued for free shares and so forth. So the numbers the precise number of the termination debt is 60 50.67 as mentioned by Siemens definitely. On the management continuity, I don't fully take your point. I mean, today, the management so what has been announced is that the new CEO of the company will be the CEO of Alstom. Then of course the formation of the new team will be made of both teams and the basic principle for this new team is, I would say, best for the job type of principle. So it's a best fit type of principle. We are not going to make a unit and nations of 1 by 1 or whatever. We take the best ones and we form the new team. The rest 4th, the rest it takes, I would say, unfortunately, more than probably 1 year to close this deal. So we have time and it's a short and a long period at the same time. We have time to work on the organization, to work on the new management team and so forth. But that's how we will form the continuity of our business. In terms of revenue breakdowns, I think you have some indication on the chart. You know the revenue breakdowns of Axtone. The revenue breakdown of Cement, I will suggest that you keep this question for the next call for Cement. The next question from William Markey from Kepler Cheuvreux. Yes. Good morning, Henri and Marie Jose. Thank you very much for taking the questions. Firstly, a couple of details. Can you give us an indication of what the implied level of other investments, so you both had investments in Russia and other parts of the world, and also the type of pension liabilities that Siemens may be incorporating within the new co? Secondly, can you give us a sense of what level of the cost, the targeted synergies you may be able to retain? I noticed that Siemens is looking for a double digit margin beyond 2020 from this transaction, which against the reference of other rail transportation businesses appears quite ambitious. So putting some context on that, please. Yes, sorry. So probably I can answer the question around the pensions liability. So the size of the Siemens Mobility business is similar to ours. So we expect to receive an underfunding of roughly €400,000,000 So this would be probably the number you're looking for. In terms of target margin, I mean, clearly, we expect an improved margin, as you could see from the numbers we've presented. It's coming both, let's say, from the scale effect of the company as well as from the mix, with a higher portion of the business being made out of the signaling activities of the company. And regarding the investments, I mean, for sure, we are looking into, in particular, 2 geographies, so namely Russia, where we both have some partnerships there and in China, where we also have successful joint ventures in that market. Okay. Thank you. Next question please. From Daniela Costa from Goldman Sachs. Hi, good morning. Thanks for taking my question. I have three things I wanted to check. Going back to the point on synergies and on rolling stock, I believe in sort of in the past in prior meetings, you have said when in terms of beating that 1 plus 1 is not necessarily 2. Can you talk about that potential top line de synergies or how you get around that? And then the second thing, are there any near term tax implications that we should be aware of? And final thing, how much how many customer advances does Siemens bring to the table? Thank you. Thank you for your question. On the first question on the revenue dis synergy, we have looked of course at that. As I said, we are quite complementary. So there are not so many markets on which we are competing against each other directly and which will make us a potential dis synergies in terms of revenues. So the net net because there will be, as I said, new platforms. We can have some push through, so there is some geographies where we are, but we have not the product and Cement will bring the product and also vice versa. So overall, we don't as you have seen on the slide, we don't really expect a lot of revenue synergies net net, but we don't expect either a lot of revenue dis synergy net net. There will be some pluses and minuses. You are right, there will be some minuses, but there will also be other places where we can channel the other partner products in our own geographies. So globally, a kind of neutral on the revenue side. So regarding the tax implications, today, we've not assumed any tax synergies in our model. Clearly, the Mobility business will have to perform a significant carve out since it's today fully embedded in the various geographies and subsidiaries of the Cement's group. So this will take place in the coming months and will derive, let's say, the tax optimization scheme from there. Regarding the balance sheet structure or customer advances, I would say no reason to believe that the working capital structure or profile would be would have to change from this transaction. So today, basically, we've assumed, let's stable profile of working capital for both businesses. Okay. Thank you. Next question? We'll now take the next question from Alfred Glaser from ODDO. Yes, good morning. I was just wondering about the valuation mechanism and the numbers you published. In the Siemens adjustments for the debt like adjustments, you mentioned the pension under funding. What other adjustments did you include in this portion here, if any? And a second question on the profitability calculation, the operating EBIT, how did you exactly add up the numbers since the accounting definitions of Siemens and Alstom are not the same? And what did you do with the centrally allocated Siemens costs in that calculation? Okay. So on the valuation mechanism, you're correct. The debt like items actually comprise the understanding for pensions as well as some project financing. So the pensions understanding is assessed at €400,000,000 and the project financing for €300,000,000 So it's in total €700,000,000 in this chart. The profitability calculation that we come up with is in fact a kind of normalized calculation since it's based on the published last published numbers of Alstom, as you can recognize them as of March 17. And basically, for the Siemens Mobility, it's a kind of pro form a, which incorporates the traction drive activities added to the Mobility segment of Siemens and where we factored as well some stand alone savings of around about €100,000,000 in this calculation. So the central allocation of Siemens is actually meant to be, let's say, transformed or replaced after the carve out by potentially our own staffing or let's say some transaction service agreements for a certain period of time. This is the current assumption. Thank you, May Iosif. Next question, please? We'll now take the next question from Guillermo Pagnu from UBS. Hi, good morning. Guillermo Pignou from UBS. Just two questions from my side actually. First, would you consider that the consolidation within the market from your stance is done? Or would you continue to consolidate the market further? And then second question is related to the Olympics. Do you foresee any problems with your current size and the bidding tendering activity that you will have for the French Olympics? Thank you. Thank you. I mean, your appetite will never stop. I think we first need to complete this deal which is extremely important deal, very large and very complex of course. So this will suffice for job for the next period. Having said that, we as I said, we continue and this would be the platform for the consolidation. So this company intends to be the global leader in definitely in the railway sector and the mobility solutions. So we cannot rule out, of course, some external growth on some particular technologies or some particular geographies. But I would say that we have a lot on our plate to do so far. So let's not be too ready on that side. But in the future, definitely, the ambition is to be the platform of consolidation. In terms of all helping games, it will speed up the famous Grand Paris. So Paris will be just like a complete work area. Area. Just as a detail, you may remember that the Grand Paris, you may not know that the Grand Paris is starting by the south of Paris. Bad luck, the OMP games are in the north of Paris. So they will have to speed up in order to do the south and the north at the same time because it's, of course impossible to stop a tunneling machine when it has started and it has started in the south. So it will be it will accelerate everything. It does not for us, it's the system will be there. But in terms of rolling stock, it's a common rolling stock. So it does not change a lot our own production schedule. But it's definitely a good news. It will also speed up the project of Charles de Gaulle Express, which you will all benefit from when you come to Paris by plane because it's a nightmare to come from the airport to Paris. Here you will have the express link, which will be launched at the Olympic Games as well. So yes, it will launch some activities, but nothing we I mean, only upside for us. Next question? We'll now take the next question from Andreas Willey from JPMorgan. Yeah. Good morning, everybody. I have two questions, please. In terms of the period until closing, will there be any adjustment at the end or potential adjustment at the end for the valuation ratios based on anything that happens during that time maybe something like project loss on either side or provisions being built for a contract or some big changes in kind of the opening balance sheet working capital contribution to the deal? And the second on signaling and the risks there from an antitrust perspective, maybe you could give us some indication where kind of the market share pro form a would be in signaling in Europe if you add basically the Siemens including the old Invensis business with your signaling business? On the second one, we are not going to go into the details. I think we'll have a discussion with the European Commission on this topic. It's quite complex, as you know, depending on the relevant market, by segments, by geographies. So it's I mean there is no nothing to be worried upon, but an analysis to be done. On the net working capital, normative working capital, Maisozhay will give you a lecture on normative working capital. Classically, I mean, the deal contains an adjustment on working capital and net debt at closing. So basically, this is the classical mechanism where we've defined the normative based on the historical performance of the net working capital of both businesses, and will adjust depending on the final position at closing. Thank you, Emmanuel. Then we'll take the last two questions or last one, I think. Last one because after that you need to switch to the Siemens conference. We'll now take the last question from Christophe Quarantine from Societe Generale. Yes. Good morning, everybody. Thanks for taking my question. 2, if I may ask. 1st, could you come back on your mechanism or the mechanism that you described after 4 years where they must may have the 2% guarantees in order to that they could exercise then what is the rationale behind this opportunity Siemens? And second point, with regards to the current consortiums that you have with Bombardier, does this change the landscape or anything related to contract that has embedded with such construction before to this merger? On the first point, I mean, it's a simple option that Cement will be granted of 2% of the share and which will be accessible after 4 years and I think during 2 year period. The price is computed. I mean it's a relatively complex formula, but the formula gives a price which is not far away from the share price before, I would say the leaks, if I may say. The rationale is simple. I mean Siemens as probably you think that this is a good deal, a quite synergistic deal and therefore want to participate to the creation of the synergies at 2 portion more than the 50.67%, which is unassenable considering the beauty of the deal and this was the rationale behind. In terms of Bombardier relationship, no change, no particular change. I mean, we have some consortium with Bombardier. Siemens has some consortium with Bombardier. So we will continue to have consortium together with Bombardier. There is absolutely no thing which is being changed on that purpose. Again, I mean, don't forget that up until the closing of the deal, so we are acting as competitors with Cement as well. I mean, there's no change in our commercial behavior with Cement up until the closing itself as well. So thank you a lot for your attention. Again, it's time to hand over to my colleague from Siemens. I think I give you I mean, we have our next meeting on November 14 for the H1 results and I'd be pleased to meet some of you maybe in the meantime. Thanks a lot and talk to you soon. Bye bye. Thank you. That will conclude today's conference call. Thank you for your participation, ladies and gentlemen. You may now disconnect.