Management & Operations

DaimlerChrysler Sells Adtranz to Bombardier

Posted on August 7, 2000

Bombardier Inc. announced it has signed an agreement with DaimlerChrysler AG to acquire its subsidiary DaimlerChrysler Rail Systems GmbH (Adtranz), based in Berlin. Bombardier will pay $725 million for Adtranz, but with the sale of Adtranz’s signaling and fixed installations businesses the sale price could be reduced further. The transaction is subject to the approval of all appropriate regulatory authorities. "The combination of Bombardier Transportation and Adtranz will position the new entity among the industry leaders in all activities related to the production of rail vehicles in world markets," said President and Chief Executive Officer of Bombardier, Robert E. Brown. "This acquisition would complement our transportation activities in terms of geographical markets, products and services, broader capabilities, expertise and assets.” “The coming together of our two entities will benefit customers as it will allow us to offer a full range of state-of-the-art products and services,” added Bombardier Transportation President Jean-Yves Leblanc. “Our access to complementary technologies, such as propulsion systems, train control and communications systems and electric locomotives, will enhance our ability to compete vigorously in all markets.” Bombardier has for several years been on the acquisition hunt for a supplier of complementary equipment lines. Last year it nearly merged with Siemens Transportation Systems but talks broke down over the issue of management control. Jurgen Schrempp, Chairman of DaimlerChrysler's Board of Management, said: "Having progressively increased Adtranz's performance to a breakeven point, it is now an appropriate time to place Adtranz with a company which values rail activities as one of its core businesses. We feel Bombardier is the company best equipped to take Adtranz into the future." DaimlerChrysler increased its ownership of Adtranz to 100% in early 1999 after it bought out the half owned by the Swiss-Swedish conglomerate ABB. Adtranz's revenues for 1999 totaled $3.4 billion. Bombardier Transportation currently employs 16,000 people and its revenues for the fiscal year ended January 31, 2000 reached $2.3 billion. For Daimler, the sale is another move in its strategic focus on road vehicles. Earlier this year its aerospace unit merged with Aerospatiale Matra to form EADS, which Daimler still retains a substantial interest but is expected to sell its share of the company as it is spun off in public offerings.

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