Canadian Bombardier is reportedly selling its train operations to French Alstom.
A deal would create the world's second-largest train manufacturer and is seen as revenge for Alstom after the failed merger with Siemens.
The Wall Street Journal reported Sunday night that French train manufacturer Alstom will buy the train operations of Canadian Bombardier, based in Berlin. According to the newspaper, the companies have reached a preliminary agreement worth more than $7 billion, equivalent to 66 billion kronor, to be paid mainly in cash and partly in shares.
If the deal goes through, the new company would become the world's second-largest train supplier, after state-owned Chinese company CRRC.
However, the information does not come as a bolt from the blue. For about a month now, rumors have been rife about the deal, which has had a positive impact on both companies' share prices. Bombardier is up 48 percent in the past month on the Toronto Stock Exchange, after a tough start to the year following the profit warning on January 16. Alstom shares have climbed 7 percent during the same period.
”The final step in our transformation journey is to reduce our debt burden and resolve our capital structure. We are actively looking for alternatives that would enable faster debt repayments.”
Bombardier CEO Alain Bellemare said this in connection with the profit warning for the fourth quarter, which was interpreted as meaning that new divestments were underway.
The Canadian aircraft and train manufacturer, with 68,000 employees globally, of which 1,800 are in Sweden, has had a few tough years behind it as a result of major investments in the aviation sector. It has disposed of several businesses to improve cash flow. On Thursday, in connection with the report, Bombardier announced that it is leaving the A220 collaboration with French Airbus, which means that it is completely ceasing to manufacture commercial aircraft.
In 2015, Bombardier sold 30 percent of its train business to a Canadian pension giant for the equivalent of SEK 14 billion. Caisse de Depot et Placement du Quebec has now reportedly agreed to sell its stake to Alstom and take a minority stake in the new company.
A few years ago, a merger between Bombardier and Siemens was also close to happening. But the German train giant pulled out in favor of reaching a deal with Alstom instead. However, that deal was blocked by the European Commission in 2019 on competition grounds. A potential Alstom-Bombardier deal is also expected to be reviewed by Danish Competition Commissioner Margrethe Vestager and her subordinates.
”"After the Alstom/Siemens failure, a deal with Bombardier would be a strategic revenge for Alstom," a source close to the French government told Reuters.
Source: di.se
