Alstom said to mull Bombardier rail bid
French train maker Alstom SA is in advanced talks to acquire the rail business of Bombardier Inc., according to people familiar with the matter, as the embattled Canadian firm offloads assets following a costly expansion in aerospace.
Alstom and Bombardier could reach an agreement as early as this week, though talks could still be delayed or fall apart, according to the people, who asked not be named because the information isn’t public. Bombardier, which also makes planes, reports earnings Thursday and has been exploring asset sales to raise much-needed cash.
Alstom could pay about 7 billion euros (US$7.6 billion) for the rail business, Handelsblatt reported earlier, without saying where it got the information.
The purchase would make Alstom the clear No. 2 in rail equipment and help it counter industry leader, China’s CRRC Corp., which is increasingly targeting global sales. The Franco-Canadian deal would come after a merger between Alstom and Germany’s Siemens AG was blocked last year by the European Union on antitrust considerations.
The discussions, which were first reported by Bloomberg News on Jan. 21, started before Bombardier shocked the market last month by warning of disappointing fourth-quarter sales. Bombardier announced Thursday it will exit a venture with Airbus that builds the A220 jetliner to preserve cash.
A spokesman for Bombardier’s rail unit declined to comment as did an Alstom representative.
The planned combination of Alstom and Bombardier’s Berlin-based rail division will also face close antitrust scrutiny, having a near 50 per cent share of the market for electric multiple units and a leading position in Europe’s urban transport market, according to analysis by German consultancy SCI Verkehr.
Alstom and Bombardier have discussed potential remedies to address antitrust concerns, one of the people said.
A takeover of Bombardier’s rail business by Alstom would mark the latest attempt by some of the world’s biggest trainmakers to counter growing competition from China. Bombardier in 2017 held talks to combine its rail operations with competitor Siemens AG until the German company suddenly opted to pursue a deal with Alstom, which ultimately failed.
In February 2019, the European Union blocked the planned Franco-German merger, which the companies said would have created a European rail champion. Regulators refused to cave in to warnings by executives and politicians from both France and Germany about the looming threat of Chinese competition.
Bombardier in 2015 sold a 30 per cent stake in its Berlin-based train business to pension fund Caisse de Depot et Placement du Quebec, valuing the unit at US$5 billion at the time and helping the firm raise capital as it faced a cash drain from delays for its new jets. Caisse may retain a stake in the combined company, BFM reported yesterday.
--With assistance from Francois de Beaupuy, Nabila Ahmed and Christopher Jasper.