PARIS (Reuters) – The French government said on Wednesday that combining the rail operations of Germany’s Siemens AG (SIEGn.DE) with Alstom would preserve “strategic interests” amid fears over job cuts.

The agreement is an industrial win for French President Emmanuel Macron, who on Tuesday proposed sweeping reforms for Europe, including deeper trade cooperation.

But Macron’s political opponents have accused him of selling off another strategic asset and unions fretted about jobs.

Olivier Kohler, a trade union official in the eastern French town of Belfort, where Alstom makes high-speed TGV trains, said it was “the worst thing that could happen to us”.

“It is bound to bring a restructuring and no doubt the culling of hundreds of jobs,” Kohler said.

Siemens and Alstom shares rose after they agreed to the Franco-German rail merger, which evolved in response to the rapid rise of China’s state-owned CRRC Corp Ltd 601776.SS.

“We want to create European industrial champions because we believe this is the best way to face up to competition from China and the United States,” French Finance Minister Bruno Le Maire told reporters in Paris on Wednesday.

Le Maire said he hoped Europe could create a leading naval company similar to the Alstom-Siemens tie-up at a Franco-Italian summit in Lyon. That would be part of a deal between Paris and Rome over the STX France shipyards.

Baader Helvea Equity Research analysts described the Siemens-Alstom agreement as “a strategic move that has to be seen against the backdrop of increasing international competition over the past decade”.

In an attempt to stave off criticism that France is selling off another strategic asset, Alstom’s Henri Poupart-Lafarge will become chief executive of the new combined company which will be headquartered and listed in Paris.

But Siemens will control Siemens Alstom, with 50 percent of the combination plus a few symbolic shares. It will also get warrants allowing it to eventually acquire another 2 percent.

Alstom’s shareholders are set to receive two special dividends from the tie-up, which the two companies said could create annual synergies of 470 million euros.

ANTI-TRUST QUESTIONS

The deal has riled workers and Kohler, of the moderate CFDT trade union, said there would be “overlap everywhere”.

However, analysts covering the companies were not convinced that squeezing costs out of the combined business would be easy.

Deutsche Bank kept a “hold” rating on Alstom shares, saying extracting cost savings from the deal could be difficult.

“Politicians will also likely try to ensure some form of jobs protection in France and Germany … making cost synergies difficult to extract,” Deutsche Bank analysts wrote in a note.

The Siemens and Alstom transport businesses have combined sales of 15.3 billion euros and earnings before interest and tax of 1.2 billion euros, raising questions over whether the deal could fall foul to European anti-trust regulations.

Poupart-Lafarge, Alstom’s current chief executive, said the two companies had done their homework.

“In terms of antitrust, of course this is a large deal so no surprise it will be looked quite closely by the European Commission,” he said on an analyst call, adding he was confident of finding a solution.