Under a MoU, Alstom will acquire Bombardier Transportation with a price between EUR 5.8 billion and EUR 6.2 billion, which will be paid via a mix of cash and new Alstom shares. The transaction will also be subject to clearance from relevant regulatory authorities and anti-trust authorities. Closing is expected in the first half of 2021.
The signing of the MoU has been unanimously approved by each of Bombardier and Alstom’s board of directors, and the transaction announced is fully supported by la Caisse de dépôt et placement du Québec.
Caisse de dépôt et placement du Québec (CDPQ), which owns 32.5% stake in Bombardier Transportation, will become Alstom’s largest shareholder with approximately 18% of capital. CDPQ will reinvest 100% of its cash proceeds of EUR 2 billion and will further realise an additional investment of EUR 700 million in Alstom.
Bouygues will remain an important shareholder of Alstom with around 10% of capital.
“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. Bombardier Transportation will bring to Alstom complementary geographical presence and industrial footprint in growing markets, as well as additional technological platforms,” Henri Poupart-Lafarge, the CEO of Alstom said.
After the transaction, Alstom will have a backlog of around EUR 75 billion and revenues around EUR 15.5 billion.
Under the transaction, Bombardier and la CDPQ will sell their interests in Bombardier Transportation to Alstom on the basis of an enterprise value of EUR 7.45 billion. Total proceeds, after the deduction of debt-like items and transferred liabilities, including pension obligations, and net of Bombardier Transportation’s cash, are expected to be approximately USD 6.4 billion, subject to upward adjustments of up to USD 440 million. After deducting la Caisse’s equity position between USD 2.1 billion and USD 2.3 billion, Bombardier would receive net proceeds of between USD 4.2 to USD 4.5 billion, including USD 550 million of Alstom shares for a fixed subscription price of EUR 47.50, monetizable after a three-month lock-up post-closing, subject to closing adjustments, indemnities and the EUR to USD exchange rate. Bombardier intends to direct these proceeds towards debt paydown and will evaluate the most efficient debt reduction strategies.
“Selling the rail business will allow us to reshape and redefine our capital structure. Adding a substantial amount of cash to the balance sheet, and removing la Caisse preferred equity in Transportation, will change the game for Bombardier,” Alain Bellemare, the CEO of Bombardier Inc. said.
Bombardier Transportation has a EUR 32 billion backlog and the sales of the division had a value of EUR 7.4 billion as of December 2019.
Bombardier Transportation will notably bring to Alstom complementary geographical presence, attractive rolling stock additions, significant assets for Alstom services business, complementary and strategic new geographies in signalling, complete innovation portfolio as well as best cost industrial footprint including in Eastern Europe, Mexico and China.