Alstom announced that it signed the sale and purchase agreement (SPA) with Bombardier Inc and Caisse de dépôt et placement du Québec (CDPQ) for the acquisition of Bombardier Transportation with a revised price term.
The price agreement the acquisition of 100% of Bombardier Transportation shares will be therefore between EUR 5.5 – 5.9 billion, but it could drop to EUR 5.3 billion, against a range of EUR 5.8 – 6.2 billion as previously agreed.
The reduction is based on estimated potential post-closing adjustment and obligations linked to the net cash protection mechanism.
Under the SPA, Bombardier and CDPQ will sell their interests in Bombardier Transportation to Alstom on the basis of an enterprise value of EUR 7.15 billion, reflecting a EUR 300 million price reduction from the previously announced MoU, offset by the impact of a more favourable currency exchange rate, Bombardier says.
The financing structure remains the same as communicated previously, in particular the size and terms of the rights issue and the reserved capital increases of CDPQ and Bombardier Inc. As announced last February, pursuant to the new terms of the acquisition, CDPQ will become the largest shareholder of Alstom with approximately 18% of the share capital and voting rights.
Based on Bombardier Transportation’s current operational performance and market conditions, total proceeds after the deduction of debt-like items, transferred liabilities and estimated closing adjustments are expected to be USD 6.2 billion, based on the lower end of the range agreed to in the SPA. After deducting la Caisse’s equity position of USD 2.2B billion, Bombardier expects net proceeds of USD 4 billion*. This amount includes $585M (EUR 500M) of Alstom shares for a fixed subscription price of EUR 47.50 per share, monetizable after a three-month lock-up post-closing.
Following positive progress on antitrust regulation process, the closing of the transaction is now expected for Q1 2021 subject to regulatory approvals and customary closing conditions, with an extraordinary shareholders’ meeting to be held on October 29, 2020.
“The acquisition of Bombardier Transportation represents a transformational change for Alstom. It will enable the Group to accelerate on its strategic roadmap and strengthen its leadership in the context of a dynamic market, at a time where sustainable transportation is at the heart of the global agenda,” Henri Poupart-Lafarge CEO of Alstom said.
Alstom is convinced of the strong strategic rationale for the acquisition and is confident in its ability to recover Bombardier Transportation’s commercial, operational and profitability potential.
Alstom has confirmed its objectives to deliver EUR 400 million run rate cost synergies in year 4 to 5 and to restore Bombardier Transportation margin towards standard level in the medium term. The transaction is expected to be double digit EPS accretive in year 2 post closing and to preserve Alstom’s strong credit profile with a Baa2 rating.
The Board of Directors of Alstom approved the new terms being confident in Alstom’s capacity to deliver strong value creation for all stakeholders through this acquisition.
On February 17, Alstom has signed a MoU with Bombardier Inc. and Caisse de dépôt et placement du Québec for the acquisition of Bombardier Transportation.
*While the SPA is based on EUR currency, the parties have agreed that net cash proceeds to Bombardier will be paid in USD at the current EUR/USD exchange rate.