Crisis at Bombardier: an agreement with Alstom?

Crise chez Bombardier: un accord avec Alstom?

Bombardier has not announced the sale of its rail division to the French Alstom yesterday, but the market expects that a transaction will be concluded soon.

Bombardier’s share started the day yesterday down 8 % on the Toronto stock Exchange. Investors were disappointed by the absence of an agreement with Alstom, while the German business newspaper Handelsblatt claimed, yesterday, that an announcement was imminent.

But the market has quickly regained confidence, the title of Bombardier closing at 1.67 $, with an increase of 6.4 %.

In the morning, the agency Bloomberg has written that Alstom was in “discussions forward” with Bombardier.

And then in the afternoon, BFM Business has argued that this was nothing more than a “matter of days” before a deal is sealed.

Almost at the finish line

“It’s going to succeed, it is 99% of the case,” said a source close to Alstom BFM.

“There’s no more negotiating on the price, except at the margin “, a-t-is also provided to the French media.

According to BFM Business and Handelsblatt, the value of the transaction fluctuated between nine and 10 billion $. The portion that will be paid in cash at Bombardier will depend on the share of debt that will pay Alstom.

BFM has revealed that the Caisse de dépôt (CDPQ), which holds nearly a third of Bombardier Transportation, could become the largest shareholder of the future Alstom with a stake of 15 % to 20 %.

“CDPQ wants to “weigh in” at Alstom to defend the interests of quebec, said BFM. […] It might even deliver funds within the group to increase its participation. “

Analysts have asked yesterday the CEO of Bombardier, Alain Bellemare, why he wanted to both sell the rail division as the company will soon have more than US $ 4 billion in liquidity and that it expects to add to this pot by 2020.

“This is not a question of urgency, it is to be proactive,” replied Mr. Bellemare, recalling that Bombardier is dragging a debt of over 9 billion US$.

In the same breath, the executive has shown its commitment to Bombardier Transportation.

“We compete everywhere in the world. This is the beauty of our rail sector “, he recognized.

In 2019, Bombardier Transportation has recorded for us $ 10 billion in orders, a record.