The giant Alstom ready to shell out $ 10 billion

Bombardier may know now a days the most decisive in its history, as the multinational quebec is called to dispose of its railway operations and to turn the page on the aircraft C Series.

The French Alstom is ready to pay up to 7 billion euros ($10 billion CAD) to get hands-on with Bombardier Transportation, the rail division of the montreal company, wrote on Wednesday the German financial newspaper Handelsblatt, based on anonymous sources.

In Paris, the board of directors of Alstom met Wednesday evening to consider an offer for Bombardier Transportation, said the agency Reuters. A few hours later, in Montreal, the board of Bombardier was also a meeting to consider the proposal.

Bombardier employees gathered in February 2019 at the plant in Crespin, France. With a transaction next, these workers could join those of the multinational company Alstom, whose head office is located in the suburbs of paris.

An announcement could be made as early as this morning. The imminence of a transaction has propelled the action of Bombardier, which has gained 10.6 per cent on Wednesday on the Toronto stock Exchange.

It is also expected that Bombardier confirms this morning that the sale to Airbus of its stake from 33.6 % in the aircraft program A220, formerly known as the C Series.

Airbus in Saint-Laurent ?

Airbus could also take over a part of the activities of the Bombardier plant located in the borough of Saint-Laurent, in Montreal, where are manufactured the cockpit and other components of the A220.

The financial details of this operation will give an idea of the loss of value likely to be experienced by Quebec for its participation of 16.4% in the A220, which was acquired in 2016 at an investment of$ 1.3 billion.

In the future, Bombardier will be present only in the niche market of business aircraft. However, it is in this sector that Bombardier has the largest number of workers in Québec, with more than 10 000 people.

The american conglomerate Textron had shown interest in this division.

“I think it is positive “, said Wednesday the minister of Economy, Pierre Fitzgibbon, about the announcements to be made by Bombardier today.

Debt of 12.4 G$

With the sale of its rail division, Bombardier would reduce its heavy debt, which is close to 12.4 G$. It is not known what impact would a transaction on the liabilities of pension plans of Bombardier, which exceed$ 4 billion.

Will have to see how the prime minister François Legault will react to the sale of one of the florets of quebec’s most well-known in the world. For months, he argues that the future of Bombardier is more in trains than in planes.

The adventure of Bombardier in the rail began in 1970 with the acquisition of a firm austrian producing of trams and snowmobile engines. It continued with a big contract for the Montreal metro, in 1974, and then another for the subway in New York, in 1982, and with the purchase of the giant German Adtranz in 2001.

Bombardier Transportation

  • Revenues :$ 11 Billion
  • Backlog : 47 G$
  • 40 650 employees

Alstom

  • Revenues :$ 12b
  • Backlog:$ 62 billion
  • 36 300 employees
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