Alstom in discussions to acquire Bombardier Transportation

Alstom, the French train manufacturer, has signed a Memorandum of Understanding with Bombardier Inc. and Caisse de dépôt et placement du Québec (CDPQ) for the acquisition of Bombardier Transportation, which has a major train manufacturing facility, the Litchurch Lane Works, in Derby.

The price for the acquisition of 100% of Bombardier Transportation shares will between €5.8bn and €6.2bn and it is said the acquisition will allow Bombardier to focus on its aircraft franchise.

Henri Poupart-Lafarge, Chairman and CEO of Alstom, said: “I’m very proud to announce the acquisition of Bombardier Transportation, which is a unique opportunity to strengthen our global position on the booming mobility market. This acquisition will improve our global reach and our ability to respond to the ever-increasing need for sustainable mobility.

“Bombardier Transportation will bring to Alstom complementary geographical presence and industrial footprint in growing markets, as well as additional technological platforms. It will significantly increase our innovation capabilities to lead smart and green innovation.

“We will be thrilled to welcome all the talent and energy of Bombardier Transportation employees. We are deeply committed to step up the turnaround of Bombardier Transportation activities and deliver significant value to all stakeholders, particularly our customers.

“We will also further develop Bombardier Transportation’s historical presence in Québec, drawing on Québec’s well-established strengths in innovation and sustainable mobility. We are pleased to welcome CDPQ as a new long-term shareholder. CDPQ is fully supportive of the transaction and Alstom’s strategy.”

Alain Bellemare, President and Chief Executive Officer, Bombardier Inc. said: “Today marks an exciting new chapter for Bombardier. Going forward, we will focus all our capital, energy and resources on accelerating growth and driving margin expansion in our market-leading $7.0 billion business aircraft franchise. With a stronger balance sheet after the completion of this transaction, an industry-leading portfolio of products, a strong backlog, and a rapidly growing aftermarket business, we will compete in this market from a position of strength.”

“Selling the rail business will allow us to reshape and redefine our capital structure. Adding a substantial amount of cash to the balance sheet, and removing la Caisse preferred equity in Transportation, will change the game for Bombardier,” continued Bellemare. “Including expected proceeds from previously announced transactions, Bombardier would have between $6.5 and $7.0 billion of pro forma cash on hand, putting the Company on a brand-new footing to address its $9.3 billion of debt.

“We are confident that the sale of our rail business to Alstom is the right action for all stakeholders. As a company, their mission to provide the world’s most efficient mobility solutions, their commitment to technology and their focus on sustainability will serve our customers well. They also appreciate and value our technology and capabilities. Above all, they recognize our talented and passionate employees and the great work they have done.”