Alstom will acquire 100% of Bombardier Transportation’s shares at between €5.8bn and €6.2bn. Under the deal, CDPQ, which currently holds a 32.5% stake in Bombardier Transportation, will become Alstom’s largest shareholder with around 18% of capital. CDPQ will reinvest about €2bn in Alstom plus an additional €700m. Bouygues will remain a shareholder in Alstom with around 10% of capital.

The signing of the MoU was unanimously approved by the boards of both Alstom and Bombardier and the transaction is fully supported by CDPQ and Bouygues.

An extraordinary general meeting to vote on the reserved capital increases and the rights issue will take place no later than October 31. This will be followed by a rights issue between the first half of 2020 and the first half of 2021.

The transaction is subject to approval from relevant regulatory and anti-trust authorities and closure of the deal is expected in the first half of 2021. However, this will be a challenge bearing in mind that the planned merger between Alstom and Siemens Mobility was overturned by the European Commission almost exactly one year ago over the potential impact of the deal on competition in the signalling and high-speed rolling stock markets.

The acquisition of 100% of Bombardier Transportation shares will be paid through a mixture of cash and new Alstom shares. The total equity component is about €5bn, of which €2bn will be raised on the market. €2.6-2.8bn of equity will be provided by CDPQ for a fixed price of €44.45 per Alstom share. Bombardier will provide €500m in equity for a fixed price of €47.50 per Alstom share. A €2.4bn bridging facility will be fully underwritten by banks and refinanced by equity of up to €2bn to be raised through a rights issue and new debt of about €400m.

Once the transaction is completed, Alstom will have an order backlog of around €75bn and annual revenues of around €15.5bn.

“I’m very proud to announce the acquisition of Bombardier Transportation, which is a unique opportunity to strengthen our global position in the booming mobility market,” says Mr Henri Poupart-Lafarge, chairman and CEO of Alstom. “This acquisition will improve our global reach and our ability to respond to the ever-increasing need for sustainable mobility. Bombardier Transportation will bring to Alstom complementary geographical presence and industrial footprint in growing markets, as well as additional technological platforms. It will significantly increase our innovation capabilities to lead smart and green innovation.”

Bombardier says the deal marks an “exciting new chapter” for the company. “Going forward, we will focus all our capital, energy and resources on accelerating growth and driving margin expansion in our market-leading $US 7bn business aircraft franchise,” says Mr Alain Bellemare, president and CEO, of Bombardier. “With a stronger balance sheet after the completion of this transaction, an industry-leading portfolio of products, a strong backlog, and a rapidly growing aftermarket business, we will compete in this market from a position of strength”

Alstom and Bombardier Transportation operate in a growing market with passenger traffic expected to increase by 3-5% annually between 2015 and 2025 and the global rail OEM market expected to achieve a 3% cumulative annual growth rate between 2021 and 2023.


Alstom had an order backlog of €40bn and €8.1bn of annual sales at the end of its financial year on March 31 2019. By comparison, Bombardier Transportation had a €32bn order backlog and €7.4bn of sales as of December 2019. After the transaction, Alstom says it expects to benefit from significant additional technologies and added R&D resources.

Montréal will become the headquarters of Alstom of the Americas, leading all Alstom operations and expansion on the American continent. Alstom will establish a centre of excellence for design and engineering in Quebec, as well as high-tech R&D activities focused on developing sustainable mobility solutions.

“The acquisition of Bombardier Transportation is a one-time opportunity coming at the right moment for Alstom, having significantly strengthened its operational and financial profile over the past four years, and adding to Alstom complementary commercial and industrial platforms,” Alstom says.

Alstom says the deal will enable it to broaden its commercial reach in Germany, Britain, and North America and give it access to Bombardier Transportation’s unique presence in China and what Alstom describes as a best cost industrial footprint in Eastern Europe, Mexico and China. The takeover will add monorail and peoplemover systems to Alstom’s product portfolio, and give Alstom’s services business access to the largest installed train fleet worldwide and a wide range of maintenance facilities. Both companies are active in the railway signalling market.

Recovery plan

Alstom says it is committed to recover Bombardier Transportation’s full operational and profitability potential with the objective of restoring project execution and margin. This is important as Bombardier Transportation has been suffering from declining profits largely caused by a series of major delays in delivering new fleets of trains and reliability problems once trains are in service. Bombardier Transportation announced a 7% drop in revenue from $US 8.9bn in 2018 to $US 8.2bn in 2019 when it released its consolidated full year results on February 13.

Alstom says it plans to fix the problems at Bombardier Transportation by focusing on operation turnaround and backlog execution based on Alstom best practices systematic roll-out, a structured action plan to ensure successful integration and deployment of Alstom best practices and technologies globally, and instil Alstom’s financial discipline and successful track record in profitability growth. Alstom says it already has a good understanding of Bombardier Transportation through numerous projects on which the two companies have worked together.