Alstom reaches agreement to buy Bombardier (updated)

RELATED TOPICS: INTERNATIONAL | CANADA | SUPPLIERS | ACQUISITIONS
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SAINT-OUEN, France — Rail equipment manufacturer Alstom will acquire Montreal-based Bombardier Transportation in a deal worth 5.8 to 6.2 billion Euros ($6.28-$6.71 billion), Alstom has announced.

It is Alstom’s second attempt to grow in an effort to compete with China’s CRRC, the world’s largest manufacturer of rail equipment. A previous attempt to merge with Germany’s Siemens, announced in 2017, was stopped by European Union regulators last year [see “European Union blocks Siemens-Alstom deal,” Trains News Wire, Feb. 6, 2019].

The Alstom-Bombardier talks were first reported in January; the Canadian firm had also reportedly talked with Siemens, Japan’s Hitachi , and a Chinese firm in an effort to find a new home for its rail unit. Airbus and the government of Quebec bought out Bombardier’s commercial aviation program just last week for a reported $591 million. Bombardier’s only remaining business will be its private jet division, traditionally its most profitable division, the Montreal Gazette reports.

Bombardier was facing more than $9.3 billion in long-term debt, and took a $350 million charge in its fourth-quarter 2019 financial results for problems related to long-overdue high-speed trainsets for the Swiss Federal Railways and the London Overground.

Alstom said in a press release that it had signed a Memorandum of Understanding with Bombardier and its largest shareholder, pension firm Caisse de depot et placement du Quebec (CDPQ) to make the acquisition. CDPQ will become the company’s largest shareholder with 18% of Alstom’s capital, the company said.

Henri Poupart-Lafarge, Alstom chairman and CEO, said in the release that the acquisition “is a unique opportunity to strengthen our global position on the booming mobility market,” giving the company “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.”

Alstom said the deal would strengthen its presence in Quebec, with Montreal becoming the headquarters of Alstom of the Americas, and that it would add specialty items such as monorails and People Movers to its product line, while strengthening Alstom's presence in markets where Bombardier had a strong track record, including Germany, the United Kingdom, and North America.

Alstom’s current highest-profile project in the U.S. is construction of Amtrak’s next-generation Acela trainsets [see “A first look at the next-generation Acelas,” Trains News Wire, June 13, 2019]; the first of those trainsets will move to Colorado for testing later this week. Bombardier transit projects of note include cars currently under construction for the New York subway, cars and locomotives for NJ Transit, and cars for Toronto’s GO Transit.

The deal must still be approved by European Union regulators.

— Updated at 12:15 p.m. CST with additional details and background.

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