THE merger is a little unusual as it brings together two worlds: Veolia Environnement is a private company whereas Caisse des Dépôts is in the public sector. Gallot (pictured) was quick to set the record straight: "The new company is private. Caisse des Dépôts has a 50% share in Veolia Transdev, so it is not a subsidiary, and Veolia Environnement owns the other 50%. An IPO is planned for the second half of 2012 in which we intend to float 20-25% of the capital. The company will then be listed on the Paris stock exchange. With an annual turnover of €8.1bn, Veolia Transdev is the largest private operator in the world."
I asked Gallot what the rationale was for the merger. "To create a worldwide company to respond to three major shifts taking place in public transport," he replied. "First, the expectations of customers - both passengers and local authorities - are changing, secondly, there is a need for sustainable mass transit, and thirdly, only big players can face the competition from other operators and the monopolies - it's essential to have a critical size and to build our presence internationally."

Each company tended to be strong in either a particular mode of transport or a region of the world, and they only really overlapped in France and the Netherlands. The merged company has operations on all five continents and is present in 28 countries. It employs 119,000 people and carries 3.3 billion passengers a year. Veolia Transdev's rail activities are diverse, ranging from commuter rail in the United States, regional rail in Germany and the Netherlands, open-access inter-city rail in Sweden and Germany, light rail in 27 cities (mainly in Europe), and metros in Asia.

"For the future we want to develop where we can provide added value and where there is a need for intermodality," Gallot says. "We have started a strategic review to see where there is potential for growth. France, the Netherlands, Germany and the United States are the main countries where we are present at the moment."

Gallot says the regional rail market will be Veolia Transdev's priority in Europe.

"We want to be ready for when the new rules regarding competition come into place in two to three years' time, especially in France where we want to be a competitor mainly for regional trains. We want to prove that the opening up of rail services to competition will produce different ways of funding new systems.

"In the Netherlands and Germany, competition has helped us to develop the market and to carry more passengers. We can provide a better quality of service than the incumbents."

The Netherlands is the new company's second most important market after France. This is due to the earlier acquisition of 50% of the shares in bus and rail operator Connexxion which had a turnover of €1.1bn last year producing an operating profit of €16.5m. Gallot says he wants Veolia Transdev to become the majority shareholder in Connexxion and is in discussion with the Dutch government on how to acquire its 33% stake.

Gallot has ambitions to expand its commuter rail activities in the United States where Veolia Transdev already operates services in Boston, San Diego and Florida. "In the US we will review our strategy both in terms of geography and modes of transport," Gallot says. "It is important to use the experience of our people to make the best use of their abilities."

Another avenue for growth is through joint ventures, which Gallot acknowledges can be a good thing. The company has joint ventures in Asia with Paris Transport Authority (RATP) on metro Line 9 in Seoul and in Mumbai where the two companies have won a contract to operate the city's first two metro lines.

Veolia Transdev has a joint venture with Italian Railways (FS) subsidiary Trenitalia to start operating trains between northern Italy and France at the end of this year. "We will have the first board meeting with Trenitalia under the new joint venture in a few weeks," Gallot revealed. The objective is for the joint venture to take over the operation of the night trains between Italian cities and Paris, which are currently run by French National Railways (SNCF) and Trenitalia, and to introduce new day services between the two countries.

Gallot sees "quality of service and innovation" as the watchwords for the new company. "We must focus on the needs of all our customers, and react to their needs to gain their confidence."