France's Alstom confirms talks to buy Bombardier Transport

France's train giant Alstom said Monday it was in talks to buy Canada's Bombardier Transport rail division. "Discussions are ongoing. No final decision has been taken," Alstom said in a statement as it bids to add scale in a sector where China's state-owned CRRC is the world's largest rolling stock manufacturer.

Alstom is making its move a year after seeing the European Commission block an attempt at a mega-merger of its rail activities with Germany's Siemens, which would have created a European rail champion. The mooted deal for Berlin-based Bombardier Transport, in which the Quebec pension firm Caisse de Depot et Placement has a 32.5 percent stake, will cost around a reported $7 billion, according to media reports.

Bombardier Transport last year posted sales of $8.3 billion, ending 2019 with $35.8 billion of business on its order books. Alstom's 2018-2019 sales came in at $8.1 billion and had outstanding orders of $43 billion at the end of 2018.

Heavy-indebted Bombardier, which started out making snowmobiles 80 years ago, embarked in 2015 on a major restructuring and said in January it was planning a range of divestments. Last year, struggling to stay afloat with a debt pile of some $9 billion, Canada's top manufacturer agreed to sell off its regional jet program to Japan's Mitsubishi Heavy Industries for $750 million.

In 2018 it had ceded control of Airbus of the CSeries medium-haul jet, now renamed the A220. On February 13, Bombardier said it would sell off to Airbus and the Quebec government -- where the firm has some 14,000 staff and supports around another 40,000 jobs -- its remaining 33.58 percent stake in the program.

Bombardier furthermore recently announced it was selling off its aerostructures business to Spirit AeroSystems of the US for more than $1 billion in cash and debt. In aeronautics, the Canadians retain their profitable business affairs operations with the Learjet, Challenger and Global Express business jets.

On January 16, Bombardier had announced it was "actively pursuing alternatives that would allow us to accelerate our debt paydown," while again revising downward its preliminary 2019 revenues. 

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