Bombardier deal to sell rail to Alstom at lower price
September 16, 2020 ByHelicopters Staff
Bombardier today announced it signed a definitive agreement with Alstom SA, and the Caisse de dépôt et placement du Québec, for the sale of its Transportation business to Alstom. The rail deal is expected to now close in the first quarter of 2021, with net proceeds to Bombardier expected to be around US$4 billion at closing, after deducting la Caisse’s equity position of US$2.2 billion.
Under the agreement, Bombardier and la Caisse will sell their interests in Bombardier Transportation to Alstom on the basis of an enterprise value of US$8.4 billion (€7.15 billion), reflecting a US$350 million price reduction from the initial Memorandum of Understanding announced by the two companies in February 2020.
Bombardier explains, that based on 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 US$6.2 billion, based on the lower end of the range agreed to in the new definitive agreement with Alstom.
The US$4 billion in net proceeds expected for Bombardier also includes $585 million of Alstom shares at a fixed subscription price of €47.50 per share.
“Today’s announcement marks a significant milestone towards achieving our near-term priorities and repositioning Bombardier as a pure-play business jet company,” said Éric Martel, president and CEO, Bombardier Inc. “The proceeds from this transaction will allow us to begin reshaping our capital structure and start addressing our balance sheet through debt paydown, so that we can achieve the full potential of our incredibly talented employees and our industry leading business-jet portfolio.”
The new agreement has obtained regulatory approvals from some jurisdictions, including the European Commission, but remains subject to the completion of the reviews and other customary closing conditions. This includes Alstom shareholder approval at the company’s upcoming October 29, 2020 Extraordinary Shareholders’ Meeting.
Alstom SA is a French multinational company focused on a range of worldwide rail transport markets, with more than 38,000 employees on 105 sites in 60 countries. The Paris-based company generated orders of approximately €9.9 billion in its 2019/2020 fiscal year.