ALSTOM - SIEMENS MERGER

ALSTOM, the maker of France's TGV trains, and German industrial giant Siemens said they are to merge their rail activities in a politically tricky deal-

To create ''a new European champion'' big enough to take on world leader CRRC of China.

State-controlled Alstom, the manufacturer of French high-speed trains, which are a source of national pride, called the tie-up with its German competitor ''a key moment in Alstom's history, confirming its position as the platform for rail sector consolidation''.

The group headquarters will be in Paris area and, initially, Siemens will hold 50-percent stake in the new entity, al Alstom statement released late on Tuesday said.

However, the German giant will be able to increase its stake to a majority after a period of four years.

''We  are creating a new European champion in the rail industry for the long term.  This will give our customers around the world a more innovative and more competitive portfolio,'' sad Siemens chief executive Joe Kaeser.