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French company Alstom said on Monday it had agreed to buy the rail division of Bombardier, speeding up the Canadian firms fire sale.
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Alstom will pay up to 6.2 billion euros ($6.8 billion) in a mix of cash and shares, according to a memorandum of understanding between the firms.
The Quebec pension firm Caisse de Depot, which owns 32.5 percent in Bombardier Transportation, will become Alstoms biggest single shareholder on completion with around 18 percent in the French company.
Alstom said it planned to move its Americas headquarters to Montreal.
Improve global reach
“This acquisition will improve our global reach and our ability to respond to the ever-increasing need for sustainable mobility,” said CEO Henri Poupart-Lafarge.
“There is no idea of restructuring or threats to jobs, but rather the opposite,” he later told journalists.
The acquisition stood to boost Alstoms presence in markets where Bombardier is strong – notably Germany, Britain, North America – and also in China where the Canadian companys position is “unique”, he said.
Analysts said the French company hopes to add scale in a sector where Chinas state-owned CRCC is the worlds largest rolling stock manufacturer.
Alstoms move comes a year after the European Commission blocked an attempt at a mega-merger of its rail activities with those of Germanys Siemens, which would have created a European rail champion.
Berlin-based Bombardier Transport last year posted sales of $8.3 billion, ending 2019 with $35.8 billion of business on its order books.
Alstoms 2018-2019 sales came in at $8.1 billion and the firm had outstanding orders of $43 billion at the end of 2018.
Heavily indebted Bombardier, which started out making snowmobiles 80 years ago, embarked in 2015 on a major restructuring and said in January it was planning a range of divestments.
Last year, burdened by a debt pile of some $9 billion – most of it long-term – Canadas top manufacturer agreed to sell off its regional jet programme to Japans Mitsubishi Heavy Industries for $750 million.
In 2018, it had sold control of the CSeries medium-haul jet programme to Airbus which renamed it the A220.
Last week, Bombardier said it would sell off to Airbus and the Quebec government – where the firm has some 14,000 staff and supports around another 40,000 jobs – its remaining 33.58 percent stake in the programme.
Bombardier also recently announced it was selling off its aerostructures business to Spirit AeroSystems of the US for more than $1 billion in cash and debt.
The Canadians, with a workforce of some 36,000, retain their profitable Learjet, Challenger and Global Express business jets activity.
On January 16, Bombardier had announced it was “actively pursuing alternatives that would allow us to accelerate our debt paydown,” while again revising downward its preliminary 2019 revenues.
Alstom, which makes Frances TGV high-speed trains, Read More – Source
