Rail unit purchase represents ‘transformational change’
Alstom has finalized its purchase of Bombardier’s rail unit, whose products range from trains to sub-systems and signaling to complete turnkey transport systems, e-mobility technology and data-driven maintenance services
“The acquisition of Bombardier Transportation represents a transformational change for Alstom,” said Henri Poupart-Lafarge chairman and CEO of Alstom. “It will enable the group to accelerate on its strategic roadmap and strengthen its leadership in the context of a dynamic market, at a time where sustainable transportation is at the heart of the global agenda.”
For Bombardier, the sale marks a significant milestone towards achieving the company’s near-term priorities and repositioning Bombardier as a pure-play business jet company, said Éric Martel, president and CEO of Bombardier Inc.
“The proceeds from this transaction will allow us to begin reshaping our capital structure and start addressing our balance sheet through debt paydown so that we can achieve the full potential of our incredibly talented employees and our industry-leading business jet portfolio,” Martel said.
Bombardier Transportation adds a complementary geographical presence to broaden Alstom’s commercial reach in key growing markets, strong product complementarities in rolling stock, strategic scale in services and signaling, industrial capacity in key countries, a leading portfolio offering and additional R&D capabilities to invest in green and smart innovation, Alstom said in a news release. Alstom will also welcome new talent and expertise, with the arrival of Bombardier Transportation employees.
Terms of the agreement have been adapted to the current market situation. A €300 million reduction in the price range has been agreed with Bombardier Inc and CDPQ. Excluding any further downward adjustments linked to the net cash protection mechanism, the price range for the acquisition of 100% of Bombardier Transportation shares will be therefore €5.5 to €5.9 billion.
The financing structure remains the same as communicated previously, in particular the size and terms of the rights issue and the reserved capital increases of CDPQ and Bombardier Inc. As announced last February, pursuant to the new terms of the acquisition, CDPQ will become the largest shareholder of Alstom with approximately 18% of the share capital and voting rights.
In a news release, Alstom said it is convinced of the strong strategic rationale for the acquisition and is confident in its ability to recover Bombardier Transportation’s commercial, operational and profitability potential. Alstom confirms its objectives to deliver €400 million run rate cost synergies in year 4 to 5 and to restore Bombardier Transportation margin towards standard level in the medium term.
Alstom’s Board of Directors approved these new terms and is confident in Alstom’s capacity to deliver strong value creation for all stakeholders through this acquisition, the company said.
Following positive progress on antitrust regulation process, the closing of the transaction is now expected for Q1 2021 subject to regulatory approvals and customary closing conditions, with an extraordinary shareholders’ meeting to be held on Oct. 29.
Headquartered in Berlin, Germany, Bombardier Transportation employs around 36 000 people and its products and services operate in over 60 countries.