Alstom and Bombardier Sign Acquisition MoU

Following the confirmation that Alstom was indeed in talks with Bombardier to acquire Bombardier Transportation, Alstom and Bombardier announced they had signed a Memorandum of Understanding agreeing that Alstom would acquire 100 percent of Bombardier Transportation from Bombardier Inc. and Caisse de Dépôt et Placement du Québec (CDPQ).

The two companies want to complete the transaction in the first half of 2021, depending on regulatory approval. They agreed a price of between 5.8 billion euros (6.3 billion USD) and 6.2 billion euros (6.7 billion USD). This money would come from a mix of cash and new Alstom shares. CDPQ meanwhile would reinvest around 2 billion euros (2.2 billion USD), corresponding to 100 percent of cash proceeds that would come from the sale of its stake in Bombardier Transportation and further invest 0.7 billion euros (0.76 billion USD) in Alstom.

After the transaction Alstom would have a backlog in the region of 72 billion euros (78 billion USD), with 40 billion euros (43 billion USD) coming from Alstom and 32 billion euros (34.7 billion USD) coming from Bombardier Transportation, and revenues of around 15.5 billion euros (16.8 billion USD).

Bombardier says it wants to focus on its aviation business.

Henri Poupart-Lafarge, Chairman and CEO, Alstom, said:

“I'm very proud to announce the acquisition of Bombardier Transportation, which is a unique opportunity to strengthen our global position on the booming mobility market. 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 shareholders, particularly our customers. We will also further develop Bombardier Transportation's historical presence in Québec, drawing on Québec's well-established strengths in innovation and sustainable mobility. We are pleased to welcome CDPQ as a new long-term shareholder. CDPQ is fully supportive of the transaction and Alstom's strategy.”

Alstom sees this move as taking place in a very favourable market, citing that passenger traffic is estimated to increase by 3–5 percent annually between 2015 and 2025. Furthermore, the compound annual growth rate of the global rail OEM market is expected to be +3 percent between 2021 and 2023. Alstom says this dynamic is underpinned by a trend towards urbanisation and a strong drive for decarbonisation.

Alstom said:

“In Europe, the European Commission has set very ambitious targets in terms of CO2 reduction and several countries have announced large investments in rail.”

What Bombardier Transportation Has to Offer

Alstom says there are several factors that make Bombardier Transportation an attractive proposition. They are:

  • a complementary geographical presence: Alstom can benefit from Bombardier’s history in Germany, the UK, North America and China
  • a good rolling stock portfolio to add to Alstom’s output, making Alstom’s offering more comprehensive, e.g. Bombardier’s monorail and APM
  • significant assets for Alstom’s services business
  • complementary and strategic new locations in the signalling market
  • a complete innovation portfolio coupled with significant engineering R&D resources to push ahead with smart and green innovations
  • best-cost industrial footprint including in eastern Europe, Mexico and China, and complementary footprint in well-established markets such as Germany and the UK
Alain Bellemare, President and Chief Executive Office, 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.”

Alstom’s Plan

Alstom says it wants to recover Bombardier Transportation’s full operational and profitability potential with the aim of restoring project execution and margin towards standard level. To achieve this, Alstom will:

  • focus on operation turnaround and and fulfilling the backlog using Alstom’s best practices systematic roll-out
  • create a structured action plan to make sure there is successful integration and deployment of Alstom’s best practices and technologies around the world
  • instil its financial discipline and successful track record in boosting profitability


The boards of directors of both Alstom and Bombardier have approved the MoU. There will be an extraordinary general meeting (EGM) voting on the reserved capital increases and the rights issue no later than 31 October 2020.

Subject to this EGM Alstom says the rights issue will take place between H2 2020 and H1 2021 and the reserved capital increases will take place at closing. It notes the transaction will be subject to clearance from both regulatory authorities and anti-trust authorities. If granted, Alstom expects the transaction to close in the first half of 2021.

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