Ladies and gentlemen, welcome to the Alstom conference call. Today's conference is being recorded. I now hand over to Henri Poupart-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. I'm extremely pleased to present to you our new project. It's an extremely exciting time. I will just summarize the proposed transaction. I will present the new company, Marie-José, with me today, will go through the transaction terms. We'll be open for Q&A with Selma. Basically, what has been announced yesterday night, very simply, the signature of a memorandum of understanding for the combination of the mobility businesses, both of Siemens and Alstom. It will be a group which will be listed in France, in Paris, with headquarters 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 Siemens.
Clearly, this is a deal that we were expecting. This was our main priority, which we were looking for a long period. 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 complementarities in terms of know-how. We are more global in our footprint. Siemens is more digital-oriented, has a better expertise in digital technologies. The combination of the two was actually ideal, and this is why we are so happy today, so excited, because this is really something that the ex-com of Alstom, the board of Alstom, was looking for a long time. The combined entity will be a global leader, as I said.
Revenues of EUR 15.3 billion and an adjusted EBIT of EUR 1.2 billion. The deal in itself will bring some synergies. We have estimated, both Siemens and ourselves together, that the EBIT synergies will amount to EUR 470 million after four years. Of course, it takes some time to implement the synergies. This is a deal which will create undoubtedly a lot of synergies in addition, I would say, to the strategic intent. For Marie-José, we come back on the transaction terms. We'll take this opportunity also to clear our balance sheet issues, and particularly what we would do with the proceeds of the GE put, the so-called GE put. We will distribute up to EUR 8 per share of dividend to our shareholders. Marie-José will explain how it fits in the valuation of the transaction.
In a nutshell, today is the day we were all waiting for since a while. You remember that I talked a number of times about consolidation. I always said there was no do or die type of deal, and I mean it. The deal which we do is not a defensive deal, it's definitely an offensive one, and it's to grasp these fantastic opportunities which has arisen. The rest of the presentation, you probably already know. The Alstom overview, we have a backlog of EUR 34.8 billion, sales of EUR 7.3 billion with a split, less than half of Rolling Stock. Signalling services and systems being equally sharing the second half of our business. 32,800 employees. Siemens Mobility is quite similar in size to Alstom.
Just as a precision, the deal includes the full Siemens Mobility division, all the activities of Siemens Mobility, but also include the traction drive, which today are in Siemens industrial segments. That it's not managed by Siemens Mobility, even though the numbers are going through Siemens Mobility as well in terms of turnover. Siemens Mobility you know as well as much as Alstom. The split of activity is similar, except for Signalling, which has a higher weight in Siemens Mobility, as we know, and this is one of the reasons why we are so excited by the deal. System and services probably a little bit smaller in their activities. The different business model and with higher proportion of Signalling, makes the backlog of Siemens mechanically lower. What would the new company look like? First of all, I'll come back 1 minute on the rationale.
Seven basic reasons. I will go through each of them. The first, of course, is the creation of a global leader. You know that there are two basic trends in our industry. One is globalization. You know that. Over the last 10 years, our industry has globalized. 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. That's the globalization of the industry, and we have pursued the globalization ourselves. Of course, this deal will enhance this globalization. It's really the global leader creation. The second trend of our industry is the digitalization and the fact that beyond the pure Rolling Stock, the optimization of the system, of the efficiency of the system, is absolutely instrumental to the future of the transport.
Also, the global leader, our size, will enable us to invest more in these technologies than we were capable of doing alone. One, first reason, the global leader. It's not a global leader which is made of two, I would say, second-tier players. It's clearly a global leader made of two very first-ranked companies. Very renowned brands, 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 five continents very nicely. Without going in detail, you know, for example, that we have a large footprint in India. Siemens is probably more present in China. We have some footprint in Africa. We are complementing each other, for example, in the U.S., where we are more on the East Coast, Siemens is more on the West Coast.
If you look physically, you will see that we are now covering the full globe very nicely. As I said, this global leader is not only a question of size, is not only a question of geographies, it is also a question of innovation, of R&D capabilities, digital innovation. 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 fifth one is a more subtle one, but I really like it a lot. Having gone for the last 20 years in Alstom, I think if we can combine, and we will combine, the beauty of being a standalone business with the agility of a standalone 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. At the same time, benefiting from a strong shareholder, a strong group, that is the goal. That is what we will propose today, is at the same time being a standalone business, listed with its own dynamism, but at the same time, be part of the Siemens Group. Siemens Group will bring to us financial capabilities, will bring to us technological capabilities, notably thanks to their large digital platform. We'll combine the best of the two worlds. One, the agility and the dynamism of a pure player and the umbrella of a large and extremely renowned group.
This deal, I think will create a lot of value for our shareholders, for our existing shareholders and for our future shareholders of the new companies with the synergies. Of course, last but not least, it has a strong financial profile. We have the target of having a company which is really a standalone on that respect. We 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 Alstom 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. That's why we are targeting a balance sheet of more than EUR 500 million of net cash, which I think is something which is necessary for the company going forward.
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, and to illustrate the consolidation. We, in the past, have participated to the consolidation of the industry. Siemens has participated to the consolidation industry. 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, Siemens has a Vectron, which is extremely successful in terms of loco. There are high floor tramways, for example. 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. 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, there is a strong link between the geographies and the signaling because even though you have the ERTMS, 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 different type of contracts for our own fleet and own base. On system, I think here as well, we are complementing our two expertise on systems. With both of us, we have system capabilities. Here I would say that size matters.
This is a business which is based upon expertise. By combining forces, clearly we'll have a strong know-how on that domain. Both of us, we are working as well on outside the pure rail systems. We have to recognize that Siemens is more advanced in a number of areas in terms of smart highways, for example. We are both working on e-highways, we will combine as well our expertise on global mobility beyond the rail system. In terms of employees, this slide shows you that we are both in Europe and in the world. I said at the beginning, Alstom was probably more global from its footprint standpoint. Still, you have Siemens Mobility all around the world as well.
Now, clearly, I was mentioning that a number of times in the past, we were seeking for critical size on all the continents, because I believe that we need to have critical size on all the continents to serve the local market. Clearly now with Siemens coming on board, we have this critical size. One word on this critical size, as I said, 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, Siemens is present in much more than we are in Paris, in New York, very prominent cities, which will add to our portfolio of cities. Services, as I said, a number of different footprints. 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. We have launched our hydrogen technology. Siemens has just launched a new Mireo train. We are both working on predictive maintenance, here we can join force, to offer sooner than later some solutions on predictive maintenance. On data analytics, where Siemens is particularly advanced. We have worked on connectivity, thanks to the acquisition of Nomad, they have also a solution there. Smart parking, this is what something that Siemens 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. We are so pleased to join such a powerful group, both in terms of divisions with Energy Management, traditional T&D products, Process Industries and Drives.
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 MindSphere, which is a digital platform of Siemens. As I said, financing. Clearly, Siemens has financing capabilities which will benefit from the new group going forward. Synergies, always very important. 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. We've looked at first the procurement, which is the easiest one, which is the bargaining power, I would say, the increased bargaining power. Not only 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.
A lot of work to be done there. SG&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 costs. Of course, R&D, not that we want to decrease the R&D efforts, but by saving on some of the platform, we'll be able to redeploy some R&D efforts to other innovations, to new innovations, to bring new things to the market. It will enhance our R&D capabilities, in order to bring new products to the market. Of course, some others which will take more time to come through the P&L, all what is in the sourcing synergies and so forth. That will take more time, obviously. As I said, this is value creative for shareholders.
There are two dividends which will be paid at closing. One which represent the control premium, which is EUR 4 per share. The second one, which represents what we call an extraordinary dividend, which will be taken out of the put options in the energy transition. Which means that, as you can see, we are going to exercise these put options. As we don't know whether the cash coming from here will come before or after the closing, because actually the date of these put options is end of September 2018. Of course, there is some uncertainty on whether the deal will be closed at that time. We would pay either before at the closing or when we receive actually the amount from GE.
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. Now I will hand over to Marie-José, which will detail to you the transactions. Thanks.
Good morning, everyone. As described earlier, the transaction will take form of a contribution in kind of the Siemens Mobility business. Siemens will receive newly issued shares of the combined company, representing 50% of Alstom share capital on a fully diluted basis. As part of the combination, Alstom existing shareholders, as mentioned by Henri, will receive two special dividends. First, a control premium of EUR 4 per share to be paid shortly after closing. Second, an extraordinary dividend of up to EUR 4 per share to be paid out of the proceeds of Alstom's put options. Each of those dividends represents roughly EUR 2.9 billion. 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.
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 options granted by Bouygues. Let's go briefly through the valuation mechanism. 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 forma adjustments on a standalone basis. 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 three joint ventures with GE on renewables, grid, and nuclear.
After payment of the extraordinary dividends, Alstom represents the other 50% of the combined entity. A snapshot at the governance. The board of directors of the combined group will consist of 11 members. It will be comprised of six directors designated by Siemens, including the chairman of the company, and five directors designated by Alstom, including the CEO, and four independent directors with specific rights. Henri Poupart-Lafarge will continue to lead the company as the CEO and board member. The combined group will actually adopt Siemens-Alstom 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 EUR 61 billion, revenues over EUR 15 billion, and an adjusted EBIT of EUR 1.2 billion, which corresponds to an 8% margin.
This is based on the last actual figures of both businesses. In a combined setup, Siemens and Alstom expect to generate annual synergies of EUR 470 million, latest four years after the closing. The new entity targets net cash at closing over EUR 500 million. 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. What's going to happen now after the signing of the MoU till the closing of the transaction? Siemens and Alstom will initiate works councils 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. 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. I now propose to open the session for the Q&A.
Thanks, Marie-José.
Thank you. If you'd like to ask a question over the phone, please press star one on your telephone keypad. Please ensure the mute function on your telephone is switched off to allow signal to reach our equipment. Again, please press star one to ask a question. We'll take our first question from Simon Toennessen 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 we obviously heard a lot about the synergies now, but there's got 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. Secondly, the net cash target of half a billion to a billion by the closing. Can you just walk us through a bit your thoughts here from the EUR 200 million 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 EUR 250 million. We made the analysis. One thing which is, as I said, quite good in this is that all these numbers have been shared, and I think this is a combined view or shared view of what will be the situation. 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. As you have seen, there is the value analysis, which has been presented by Marie-José, whereby, the control premium is deducted from the value of the Siemens Mobility to take into account to get to the 50/50.
In terms of liquidity, this control premium and the dividend is also paid by the cash from the joint ventures. That's why when you add, we have today EUR 200 million of debt. If you add back the EUR 2.5 billion of dividend of the GE put, sorry, and then you deduct the eight EUR of dividend, you will get to something which is probably close to the number I was mentioning. Then you have the cash generated in the year and so forth. In rough terms, if you take that, these two numbers, you get to where I said.
Okay. Thank you.
We'll now take the next-
Two days ago.
We'll now take the next question from James Moore from Redburn.
Oh, good morning, everybody. I just wondered if I could ask two questions, one on synergies and one 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 Signalling side than on Rolling Stock? Do you see the synergies principally coming from sort of fixed costs, like S, G, and A and R&D or also from variable costs? Could you just perhaps give us a little color on the synergies, please, Henri? 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. If we look at European shares, it may not.
It seems from the outside that some big political characters in France and Germany are in favor of this European deal. Do you think that helps the odds of looking at this globally? Has there any commitment been made on that front, or what can we say there? Thank you.
Thank you. On the synergies, as I said it, you are right, the industrial synergies on the Rolling Stock side will not come extremely easily, and will take time to implement industrial synergies. At the same time, all what is structure and in particular, also procurement, which will come very rapidly. Procurement is of course, related to the variable cost to take your point. We have both variable costs through the procurement, and we have, I would say structural costs through the SG&A. Your point is valid, in terms of fixed cost, industrial fixed cost, this will take more time to come, definitely. This is for Rolling Stock. You are right, in terms of Signalling and digital, I think the R&D portion will prevail, that we will have also some sourcing, but clearly R&D will prevail.
The R&D content of the digital and Signalling activities is of course much higher, and therefore synergy will come more from the R&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, Alstom has developed a low-cost base, in the past. We have a strong footprint in India, for example. This effort to develop the low-cost base will benefit in the future to both companies. 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.
That's something which we have not really factored in the synergies, which is a kind of change of the supply chain, even internally. That of course, will be an element of synergies. In terms of antitrust, of course, this is a large deal, no surprise it will be looked at quite closely by the European Commission. No surprise as well, we are not entering into this deal without thorough internal analysis of this topic. If we go there, it's because we are confident that we will find the solution with the European Commission, and this will not create too many synergies. Far from that. That's where we are, and we need to have the process going on. 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 has its 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.
I think our product portfolio, and our platforms, is made out of sub-elements and subsystems and bricks. 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-decker and on push-pull type of various speed technology. Whereas Siemens with the Velaro is on distributed power and single deck. It serves different type of markets. To be fair, we are not competing so much directly against one each other. For example, in Turkey, Siemens was qualified. We were not, because we had the double deck, and they didn't want to push-pull and so forth.
Of course, we'll have to unify the platforms and homogenize the platforms through standard subsystem and so forth. It will enrich the spectrum of the different possibilities that we will have and the different products that we could offer to the market. There will be rationalization, but the platforms. For example, tramway. As an example, tramway, we have a platform. We have low floors. Siemens has high floor of tram. Which is not a surprise, because we are only on the new networks, whereas Siemens was more present on the German or the Eastern Europe network, which is an old network made of high-floor trams. Here as well, we are going to make a common platform, of course, of high and low floor, or low-floor trams, made of components from both companies. 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 50/50. In the Siemens presentation, it's 50.6. Can you just clarify how that will be post-deal? Is it possible to get a breakdown of revenues? I know you give the sort of charts in there, can you actually give us the sort of pro forma breakdown by the four segments? 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.
Yeah. On this 50.6, actually what I said is that the shareholding is structured as a 50% on a fully diluted basis. Taking into account all potential issuances of shares through stock options and free shares. At the termination date, which is the date where we fix everything, indeed, Siemens will have 50.67 at the time. Of course, we are a listed company, it fluctuates depending on the number of shares which are issued for free shares and so forth. The precise number at determination date is 50.67, as mentioned by Siemens, definitely. On the management continuity, I don't fully take your point. Today, the management, what has been announced is that the new CEO of the company will be the CEO of Alstom.
Of course, the formation of the new team will be made of both teams, the basic principle for this new team is, I would say, best for the job type of principle. It's a best fit type of principle. We are not going to make a unit emissions of by one by one or whatever. We take the best ones, we form the new team. The rest will take, I would say, unfortunately, more than probably one year to close this deal. We have time. 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. That's how we'll 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 Alstom, the revenue breakdown of Siemens. I will suggest that you keep this question for the next call for Siemens.
Okay.
The next question from William Mackie from Kepler Cheuvreux.
Yes. Good morning, Henri, Marie-José. 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, 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 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. Putting some context on that, please.
Okay.
Yeah, sorry. Probably I can answer the question around the pension liability. The size of the Siemens Mobility business is similar to ours. We expect to receive an understanding of roughly EUR 400 million. This would be probably the number you're looking for. In terms of target margin, 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 Signalling activities of the company. Regarding the investments, for sure, we are looking into, in particular, two geographies. 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 the past, in prior meetings, you have said when, in terms of beating that one plus one is not necessarily two. Can you talk about that potential top line, the synergies, or how you get around that? The second thing, are there any near-term tax implications that we should be aware of? Final thing, how many customer advances does Siemens bring to the table? Thank you.
Thank you for your question. On your first question on the revenue dis-synergy, we have looked, of course, at that. As I said, we are quite complementary, there are not so many markets on which we are competing against each other directly and which will may cause potential dis-synergies in terms of revenues. The net because there will be, as I said, new platforms. We can have some push through, there is some geographies where we are, but we have not the product, and Siemens will bring the product and also vice versa. 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, there will also be other places where we can channel the other partner products in our own geographies. Globally, a kind of neutral on the revenue side.
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 Siemens Group. 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 have to change from this transaction. Today, basically, we've assumed, let's say, a 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 underfunding. What other adjustments did you include in this portion here, if any? I had 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?
What did you do with the centrally allocated Siemens costs in that calculation?
Okay. On the valuation mechanism, you are correct. The debt-like items actually comprise the under-funding for pensions as well as some project financing. The pensions under-funding is assessed at EUR 400 million and the project financing for EUR 300 million. It is in total, EUR 0.7 billion in this chart. The profitability calculation that we come up with is in fact a kind of normalized calculation since it is based on the last published numbers of Alstom, as you can recognize them as of March 17. Basically for the Siemens Mobility, it is a kind of pro forma, which incorporates the traction drive activities added to the Mobility segment of Siemens, and where we factored as well some standalone savings of around about EUR 100 million in this calculation.
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, Marie-Josée. Next question, please.
We'll now take the next question from Guillermo Peigneux from UBS.
Hi, good morning. Guillermo Peigneux 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? Second question is related to the Olympic Games. Do you foresee any problems with your current size and the bidding tendering activity that you will have for the French Olympic Games? Thank you.
Thank you. 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. This will suffice for job for the next period. Having said that, as I said, we continue and this would be the platform for the consolidation. This company intends to be the global leader definitely in the railway sector and the mobility solution. We cannot rule out, of course, some external growth on some particular technologies or some particular geographies. I would say that we have a lot on our plate to do so far. Let's not be too greedy on that side. In the future, definitely, this ambition is to be the platform of consolidation. In terms of Olympic Games, it will speed up the famous Grand Paris.
Paris will be just like a complete work area. Just as a detail, you may remember that the Grand Paris, you may or you may not know that the Grand Paris is starting by the south of Paris. Bad luck, the Olympic Games are in the north of Paris. 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. It will accelerate everything. For us, the system will be there, but in terms of Rolling Stock, it's a common Rolling Stock, it does not change a lot our own production schedule. 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 go from the airport to Paris. Here you will have an express link, which will be launched at the Olympic Games as well. Yes, it will launch some activities, but only upside for us. Next question.
We'll now take the next question from Andreas Willi, from J.P. Morgan.
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 the opening balance sheet, working capital contribution to the deal. The second on Signalling and the risks there from an antitrust perspective, maybe you could give us some indication where the market share pro forma would be in Signalling in Europe if you add basically the Siemens, including the old Invensys business with your Signalling business. Thank you very much.
On the second one, we are not going to go into the detail. 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 segment, by geographies. There is nothing to be worried upon, but an analysis to be done. On the net working capital, normative working capital, Marie-José will give you a lecture on normative working capital.
Classically, the deal contains an adjustment on working capital and net debt at closing. 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 we'll adjust depending on the final position at closing.
Thank you, Emma. We take the last two questions, or last one, I said. Last one, because after that, you need to switch to the Siemens conf call.
We'll now take the last question from Christophe Quéré from Société Générale.
Yes. Good morning, everybody. Thanks for taking my question. Two, if I may ask. First, could you come back on your mechanism or the mechanism that is described after 4 years, where Siemens may have the 2% guarantees in order that they could exercise? What is the rationale behind this opportunity, if I may say, for Siemens? Second point, with regards to the current consortium that you have with Bombardier, does this change the landscape or anything related to contract that has embedded with such consortium before? Talk to this manager.
On the first point, it's a simple option that Siemens will be granted of 2% of the share, which will be exercisable after 4 years, and I think during 2-year period. The price is computed. 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. Siemens, as probably you think that this is a good deal, quite synergetic deal, and therefore want to participate to the creation of the synergies at 2% more than the 50.67, which is understandable considering the beauty of the deal. This was the rationale behind. In terms of Bombardier relationship, no particular change. 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 nothing which is being changed on that purpose. Again, don't forget that up until the closing of the deal, so we are acting as competitors with Siemens as well. There's no change in our commercial behavior with Siemens up until the closing itself as well. Thank you a lot for your attention. Again, it's time to hand over to my colleague from Siemens. We have our next meeting on November 14th for the H1 results, and I'll 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.