CRRC Plans to Buy Skoda for European Railway Market Strategy
China’s CRRC,Company is in advanced talks to buy Skoda Transportation for around €2 billion.
Currently, the state-owned group and the railway giant CRRC (China Railway Rolling Stock Corp.) are planning to take over the 100% takeover of the Czech traditional manufacturer Škoda Transportation.
Skoda said in a statement that it was exploring cooperation with CRRC and declined to give further details.
The Chinese group is the world’s biggest railway technology firm with around $33.9 billion, in annual revenue. Skoda isn’t a big player but it does produce complete railway systems and generated revenues of €677 million, with profits of €22 million last year. It employs some 5,600 people, mainly at its main plant in Pilsen. It’s owned by the four-member management and five further private investors.
“Chinese investors are trying to buy everything that’s attractive in the market,” said Maria Leenen, chief executive of SCI Verkehr, an independent consulting firm specializes in traffic economy and traffic engineering.
The world’s largest rail vehicle manufacturer CRRC and Škoda Transportation have been carrying out joint projects for several years. For example, the Czechs deliver roads to the Middle Kingdom. In April 2016, for example, Škoda Electric completed a contract for a total of 18 five-part 100% low-floor streetcars, the final producer of which is the Chinese company CRRC Nanjing Puzhen, in the course of the tender for the complete electrical equipment of trams in the Chinese city of Suzhou. After the metro project in Suzhou and trams for Beijing, this was another success in the demanding Chinese market for the Pilsner company.
If the railway giants from Beijing bought the Czech railway builders, the Czechs would have more money to develop new products, in order to stand up against the railroad giants Bombardier, Siemens or Alstom.
Škoda Transportation’s key products include low-floor trams, electric locomotives, subway trains, suburban trains, O buses as well as traction motors or complete drives for traffic systems.
The Czech private long-haul company Leo Express is also cooperating with CRRC. It ordered three electric power train sets from the Chinese with the option of 30 more. It will be the first Chinese trains in Europe to be.