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MarketScreener Homepage  >  Equities  >  Euronext Paris  >  Alstom    ALO   FR0010220475

ALSTOM

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Alstom Reaches Preliminary Deal to Buy Bombardier Train Unit -- 2nd Update

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02/17/2020 | 03:13am EDT

By Jacquie McNish and Ben Dummett

French train giant Alstom SA has reached a preliminary deal to acquire Bombardier Inc.'s train business for more than $7 billion, according to people familiar with the matter, the latest effort by Alstom to gain scale amid the prospect of increased competition from China's state-owned CRRC, the world's largest rail supplier.

The deal is also the latest move by Canada's Bombardier to dramatically shrink its business after production problems and order delays in its core train unit and rising costs in some of its aviation units threatened its ability to pay more than $1.5 billion debt coming due next year.

If terms are completed, the deal could be announced as early as Monday, according to these people.

Alstom said early Monday that no final deal has been reached and talks were continuing.

Paris-based Alstom is expected to acquire the business from Montreal-based Bombardier using mostly cash and some stock, according to these people.

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 acquire a minority stake in the combined train company, according to people familiar with the matter.

In 2017, Alstom unsuccessfully tried to merge with the train-making business of German industrial giant Siemens AG. But the European Commission, the European Union's antitrust authority, blocked that proposed tie-up in 2019, arguing that it would lead to higher prices for signaling systems and the next generation of very high-speed trains in the bloc.

The Alstom-Bombardier deal would also likely face intense scrutiny from the EU among other antitrust regulators. Bombardier's train business has a big presence in Europe with headquarters in Germany. Siemens could have reason to oppose the deal following Bombardier's opposition to the German company's previous deal with Alstom.

The planned sale would more than halve Bombardier's current debt of $9 billion and reduce the once-sprawling global transportation manufacturer to a business jet manufacturer of such brands as the Challenger, Learjet and Global aircraft.

In the past year it has agreed to sell a variety of divisions including its commercial airline, turboprop and aerostructure units.

Several weeks ago it initiated talks to sell its business jet division to Textron Inc. because of concerns that negotiations to sell the train division to Alstom were bogged down. The talks with Textron are expected to be terminated once the agreement with Alstom is completed, the people familiar with the matter said.

Write to Jacquie McNish at Jacquie.McNish@wsj.com and Ben Dummett at ben.dummett@wsj.com

 

Stocks mentioned in the article
ChangeLast1st jan.
ALSTOM -2.44% 37.21 Real-time Quote.-11.89%
BOMBARDIER INC. -5.49% 0.43 Delayed Quote.-77.72%
CRRC CORPORATION LIMITED -1.50% 6.56 End-of-day quote.-1.50%
SIEMENS AG -4.45% 74.02 Delayed Quote.-36.49%
TEXTRON -6.79% 24.86 Delayed Quote.-40.20%
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Financials (EUR)
Sales 2020 8 266 M
EBIT 2020 607 M
Net income 2020 426 M
Finance 2020 869 M
Yield 2020 1,62%
P/E ratio 2020 19,4x
P/E ratio 2021 18,0x
EV / Sales2020 0,91x
EV / Sales2021 0,86x
Capitalization 8 401 M
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Mean consensus OUTPERFORM
Number of Analysts 15
Average target price 45,23  €
Last Close Price 37,21  €
Spread / Highest target 37,9%
Spread / Average Target 21,6%
Spread / Lowest Target -0,56%
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Henri Poupart-Lafarge Chairman & Chief Executive Officer
Benjamin Fitoussi Senior Vice President-Operations
Laurent Martinez Chief Financial Officer
Alexandre Domingues Chief Information & Transformation Officer
Gérard Hauser Independent Non-Executive Director
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