Alstom announced it has signed an MOU to acquire Bombardier Transportation. Purchase of the rail division of Canada's Bombardier Inc. for up to $6.7 billion would create the world's No. 2 train manufacturer and better take on China's CRRC Corp., according to a Reuters report in The New York Times. The agreement between Alstom and Bombardier would unite companies with an estimated $17 billion in combined revenue.
Post-transaction, Alstom will benefit from significant additional technologies and added R&D resources to consolidate its innovation leadership in sustainable mobility, according to a statement.
The group will also further develop its presence in Québec, Canada. After the transaction, Montréal will welcome the Headquarters of Alstom of the Americas, leading all Alstom operations and expansion in these geographies. In addition, drawing on Québec’s well-established strengths in innovation and sustainable mobility, Alstom will establish a centre of excellence for design and engineering, as well as high-tech R&D activities, which will notably be focused on developing sustainable mobility solutions.
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Henri Poupart-Lafarge, Chairman/CEO of Alstom said:
“This acquisition will improve our global reach and our ability to respond to the ever-increasing need for sustainable mobility. Bombardier Transportation will bring to Alstom complementary geographical presence and industrial footprint in growing markets, as well as additional technological platforms. It will significantly increase our innovation capabilities to lead smart and green innovation. We will be thrilled to welcome all the talent and energy of Bombardier Transportation employees. We are deeply committed to step up the turnaround of Bombardier Transportation activities and deliver significant value to all stakeholders, particularly our customers."
Alain Bellemare, President/CEO Bombardier Inc. said:
“Today marks an exciting new chapter for Bombardier. Going forward, we will focus all our capital, energy and resources on accelerating growth and driving margin expansion in our market-leading $7.0 billion business aircraft franchise. With a stronger balance sheet after the completion of this transaction, an industry-leading portfolio of products, a strong backlog, and a rapidly growing aftermarket business, we will compete in this market from a position of strength.”
The acquisition of Bombardier Transportation is a one-time opportunity coming at the right moment for Alstom, having significantly strengthened its operational and financial profile over the past four years to accelerate its strategic roadmap, and adding to Alstom complementary commercial and industrial platforms. Bombardier Transportation will notably bring to Alstom:
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Complementary geographical presence to broaden Alstom’s commercial reach in key growing markets leveraging on Bombardier’s successful historical track record in Germany, UK, North America and its unique presence in China
Attractive rolling stock additions to Alstom’s portfolio establishing a comprehensive offering across all rail segments to better address customers’ needs for fit-for-purpose mobility solutions, notably with selective niches such as Monorail, People Mover and bringing strong expertise recognition through the development of local specific solutions to blue-chip clients
Significant assets for Alstom services business with access to the largest installed train fleet worldwide and a wide maintenance facilities network in a high value segment and opening new opportunities with a strengthened market coverage and service offering
Complementary and strategic new geographies in signalling enabling Alstom to accelerate the roll-out of its solutions leveraging on new market access and highly qualified employees consolidating Alstom capabilities in a strategic segment
Complete innovation portfolio and significant engineering and R&D resources to lead smart and green mobility innovations
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Best cost industrial footprint including in Eastern Europe, Mexico and China and complementary footprint in mature markets e.g. Germany & UK
A value-creating transaction for all stakeholders
Alstom is committed to recover Bombardier Transportation’s full operational and profitability potential with the objective of restoring project execution and margin towards standard level. This will be achieved thanks to clearly identified levers including:
Focus on operation turnaround and backlog execution based on Alstom best practices systematic roll-out
Structured action plan to ensure successful integration and deployment of Alstom best practices and technologies globally
Alstom’s financial discipline and successful track record in profitability step-up
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The strong cultural fit and understanding of Bombardier Transportation developed during numerous co-led projects
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