Alstom Reaches Deal to Buy Bombardier’s Train Unit, WSJ Reports

Alstom reveals Bombardier takeover talks

Bombardier in 2017 held talks to combine its rail operations with Siemens until the German company suddenly opted to pursue the deal with Alstom.

The Quebec-based company said it expects to receive between US$4.2 and US$4.5 billion in net proceeds, which it will use to help pay down its debt, now sitting at US$9.3 billion.

Alstom, whose headquarters are in Paris, and Bombardier, announced the train merger late on Monday, though the deal was widely expected - Bombardier had confirmed that it was in talks to sell either its train or business jets division.

Shares in Bombardier have dropped some 70% since a peak in 2018, while Alstom's have risen 30% in the same period.

Caisse, for its part, will reinvest its cash proceeds in Alstom, along with an additional US$760,000, for an 18-per-cent stake in the French company. No final decision has been made'.

Quebec pension giant Caisse de dépôt et placement, which owns a 32.5% stake in Bombardier's train unit, has agreed to sell its stake to Alstom and buy a minority stake in the combined train company, the WSJ report said.

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Bombardier has been struggling with its aviation division although rail, including rolling stock and signalling, has been doing better.

Alstom is making a second attempt to bulk up, after a plan to merge with the rail unit of Germany's Siemens AG was blocked past year by the European Union on antitrust considerations.

Last year, European Union authorities blocked a proposed merger between Alstom and the train division of German industrial conglomerate Siemens AG, arguing the proposed tie-up would result in higher price tags on signalling systems and bullet trains.

Bombardier CEO Alain Bellemare said the BT sale will completely transform the highly indebted company's capital structure, giving it the financial flexibility to expand and improve the profitability of the business jets division, which faces enormous development costs as competition with big-name rivals, such as Textron and Gulfstream Aerospace, heats up.

"We don't see it as a huge issue, " Alstom Chief Executive Henri Poupart-Lafarge said of regulatory hurdles on a conference call. Bombardier said it expects its net debt to be US$2.5-billion if the transaction is completed.

Editor's note: An earlier version of this story included a typo on the deal value and an error about the assumption of liabilities.

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