Alstom to Buy Bombardier’s Rail Business for USD 7.6 billion

Bombardier is also planning to sell its assets to raise much-needed cash

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Saint-Ouen, France (Metro Rail News): French Rolling Stock manufacturer Alstom SA is now in advanced talks to buy the entire rail business unit of Bombardier Inc, according to people familiar with the matter, as the embattled Canadian firm Bombardier Inc offloads assets following an expensive expansion in aerospace.

Specialists said that both Alstom and Bombardier could sign an agreement as early as this week. Alstom may acquire the entire Rail Business of Bombardier Transportation in 7 billion euros (US$7.6 billion). Bombardier is also planning to sell its assets to raise much-needed cash.

This deal would make Alstom beat chines Rolling Stock manufacture CRRC Corporation, which is increasingly targeting global sales. The France-Canadian agreement would come after a merger between Alstom and Siemens AG was rejected by the European Union last year.

The talks between Alstom and Bombardier on this secret deal was the first time disclosed by Bloomberg last month. Bombardier’s stock continues decreasing and shocked the market last month by warning of disappointing fourth-quarter sales.

“The planned combination of Alstom and Bombardier’s Berlin-based rail division will also face close antitrust scrutiny, having a near 50% share of the market for electric multiple units and a leading position in Europe’s urban transport market,” said German consultancy SCI Verkehr.

The acquisition of Bombardier’s rail business by Alstom would mark the latest attempt by some of the world’s biggest train makers to counter growing competition from China. Earlier in 2017, Bombardier held talks to combine its rail operations with its competitor Siemens AG. Still, Siemens AG suddenly opted to pursue a deal with Alstom, which was ultimately failed later.

On another side, the European planemaker Airbus has also reached a deal to buy the remaining stake of Bombardier in the A220 passenger jet program.

“The deal signals Bombardier’s exit from commercial aviation by transferring its remaining interest in Airbus Canada to the main parent Airbus SE company and the government of the Canadian state of Quebec”, reported Reuters.

Airbus will acquire the aviation business Bombardier in US$591 million, net of adjustments, and will no longer have future funding capital requirements for Airbus Canada. The company assured that the deal would not affect the Airbus jobs in Quebec.

Sources from Bombardier said that the transaction would also help the company to improve its overall financial position.

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