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UPDATED: Bombardier reaches deal to sell rail unit to Alstom

February 16, 2020  By Wings Staff

Alstom SA is a French multinational company operating worldwide in rail transport markets. This includes the company’s high-speed Avelia Horizon project, also known as the TGV 2020, with service set to debut in 2023. (Rendering: Alstom)

Alstom on February 17 signed a Memorandum of Understanding with Bombardier Inc. and Caisse de dépôt et placement du Québec (CDPQ) to acquire Bombardier Transportation for between $8.4 billion and $9 billion. The final purchase amount is subject to Bombardier Transportation’s net cash position at closing, which is expected in the first half of 2021.

Alstom SA is a French multinational company focused on a range of worldwide rail transport markets, with more than 36,000 employees. The Paris-based company generated sales of approximately $11.5 billion in its most recently reported fiscal year, 2019/2019.

As part of the agreement, CDPQ will reinvest approximately $2.9 billion into Alstom corresponding to 100 per cent of cash proceeds to be received from the sale of its stake in Bombardier Transportation and further invest $1 billion into the company.

“We are deeply committed to step up the turnaround of Bombardier Transportation activities and deliver significant value to all stakeholders, particularly our customers,” said Henri Poupart-Lafarge, chairman and CEO of Alstom. “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.”


As per the agreement, CDPQ, which currently holds 32.5 per cent of Bombardier Transportation, will become the largest shareholder of Alstom with approximately 18 per cent of capital. As a result, CDPQ will hold significant leverage in determining what happens to Bombardier’s rail interests in terms of facilities and employees.

After the transaction, Montréal will welcome the headquarters of Alstom of the Americas. Alstom states it will also establish a centre of excellence for design and engineering, as well as high-tech R&D activities, which will be focused on developing sustainable mobility solutions.

Alstom describes Bombardier Transportation is a reference player in global rail transportation with a $45.9 billion backlog and $10.6 in sales as of December 2019. Alstom itself holds a backlog of $57.3 billion and $11.6 billion of annual sales as of March 31, 2019.

Alstom notes the positive market for rail with passenger traffic expected to grow between three to five per cent annually over the 2015-2025 period and global rail OEM market expected to achieve a +3.0 per cent CAGR between 2021-2023. The company notes this positive outlook is driven by an urbanization trend and a strong push for decarbonation of mobility.


The Wall Street Journal today reported Paris-based Alstom SA has reached a preliminary deal to acquire Bombardier’s transportation unit, focused on rail, for approximately US$7 billion. The New York-based newspaper earlier this week was the first to report that Bombardier was about to sell its interests in Airbus Canada, which oversees the A220 aircraft program that Airbus SE took a majority interest of on July 1, 2018.

The new Airbus Canada deal was finalized on February 12 with Bombardier cementing its exit from commercial aviation by transferring its shares in Airbus Canada to Airbus SE and the Government of Québec. At the time, The Wall Street Journal (WSJ), citing unnamed sources familiar with the matter, noted Bombardier was involved in talks to sell both its business-jet division – potentially to Textron Aviation – and also its rail business.

Bombardier sells stake in A220, completes commercial exit

According to today’s WSJ report, the Alstom deal to buy the Montreal company’s rail business might be announced as early as Monday. WSJ also noted Quebec’s pension fund manager, the Caisse de dépôt et placement, will sell its 32.5 per cent stake in Bombardier’s train unit to Alstom and buy a minority stake in the combined train company.

This rail-unit sale would leave Bombardier with just its business-jet division remaining, now run as Aviation, as well as some related aerostructures assets that were not sold late last year in another deal with Spirit AeroSystems. Bombardier last year also sold its CRJ program to Mitsubishi Heavy Industries, which closely followed another deal in which Longview Aviation acquired Bombardier’s entire Dash 8 program including the 100, 200 and 300 series and the in-production Q400 program.

Alstom SA is a French multinational company focused on a range of worldwide rail transport markets. With more than 36,000 employees, the company generated sales of approximately €8.0 billion ($11.5 billion in Canadian funds) in its most recently reported fiscal year, 2019/2019.


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