Bombardier in talks to sell train-making division to French multinational Alstom

Alstom signs MoU for the acquisition of Bombardier Transportation

Alstom was blocked past year by European regulators from merging with Germany's Siemens, while a previous flirtation between Siemens and debt-laden Bombardier to combine some train businesses fell apart in 2017.

The French government, which had criticized the EU's veto on the Siemens merger, welcomed the transaction.

The newspaper also said Quebec's pension fund manager, the Caisse de dépôt et placement, will sell its 32.5 per cent stake in Bombardier's train unit to Alstom and buy a minority stake in the combined train company.

Train makers are eyeing consolidation to reduce costs through scale and improve thin rolling stock margins.

Combining with Bombardier Transportation would make Alstom the clear No. 2 in rail equipment and help it counter the industry leader, China's CRRC Corp., which is increasingly targeting global sales.

European regulators had argued the Alstom-Siemens deal could hurt competition and lead to higher prices for consumers.


It ultimately falied in February 2019, when the European Union blocked the plan, which the companies said would have created a European rail champion.

The decision to nix that deal was criticized by some European governments who want to create large European companies in various sectors that are capable of competing with state-backed companies in China and as well as US multinationals. The acquisition is likely to add to earnings per share within two years and generate as much as 400 million euros in annual savings for Alstom within five years. It faced a cash crunch in 2015 while bringing a new plane to market, and has been considering selling assets.

The statement adds that 'discussions are on-going. Bombardier announced Thursday it will exit a venture with Airbus that builds the A220 jetliner to preserve cash.

The deal marks a major shift in Bombardier's turnaround plan as the plane-and-train maker would cast off its problem-plagued largest division and commit itself exclusively to business jets, in part to help pay down more than US$9 billion in debt.

Shares in Bombardier have dropped some 70% since a peak in 2018, while Alstom's have risen 30% in the same period. State-owned Deutsche Bahn is a big customer of both firms.

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