PARIS (Reuters) - French heavy engineering group Alstom (ALSO.PA) signed a long-awaited deal to buy 25 percent of Russian railway equipment maker TransmashHolding (TMH) on Monday to expand in Europe"s largest rail market.
Alstom could cooperate with TMH on a 1 billion-euro ($1.35 billion) contract to supply 200 locomotives for the Russian railways as part of the partnership, Alstom Chief Executive Patrick Kron said.
"The Russian market is a large railway market which has very considerable needs in terms of renovation and development, and so for Alstom it"s a chance to take part in this major project," Kron said.
The deal was signed in Paris during a three-day state visit to France by Russian President Dmitry Medvedev. The companies had already signed a letter of intent a year ago after agreeing a strategic partnership in October 2008.
Alstom will take 25 percent plus one share in TMH"s parent company, Breakers Investment BV, under the agreement, it said.
The French company confirmed it will make an initial payment of $75 million for the stake once certain conditions are met "within a maximum of six months." The balance will be paid in 2012 and will depend on TMH"s results from 2008 to 2011.
TMH is the main manufacturer of rolling stock in Russia, Europe"s largest railway market with over 85,000 kilometres (52,820 miles) of track, carrying some 1.3 billion passengers and 1.3 billion tonnes of freight each year.
A representative of Alstom Transport has already been appointed as TMH"s deputy managing director. And the companies have set up a joint engineering company, which is working on an electric passenger locomotive.
Kron added that it was up to the Russian railways to decide on the locomotive order.
($1=.7395 Euro)
(Reporting by Emmanuel Jarry and Yann Le Guernigou, editing by Dave Zimmerman)
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