The price was reduced from the range of €5.8bn and €6.2bn agreed in February due to Bombardier’s operational performance, the Covid-19 pandemic and wider market conditions, excluding any further downward adjustments linked to the net cash protection mechanism. Alstom says it now expects this to drop further to €5.3bn, based on estimated potential post-closing adjustment and obligations linked to the mechanism.
Other financial aspects of the deal remain in place. This includes CDPQ, which currently holds a 32.5% stake in Bombardier Transportation, becoming Alstom’s largest shareholder with around 18% of capital. CDPQ will also reinvest about €2bn in Alstom plus an additional €700m. Bouygues will remain a shareholder in Alstom with around 10% of capital.
Bombardier Transportation reported an adjusted Ebit loss of $US 383m for its second quarter results released on August 6, after reporting revenues of $US 1.5bn for the period. Adjusted Ebitda for the quarter was negative $US 350m.
Alstom says it 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 confirmed its objectives to deliver €400m run rate cost synergies in year four to five after the acquisition and to restore Bombardier Transportation margin towards standard level in the medium term. The transaction is expected to be double digit earnings per share (EPS) gradual growth in year two post closing and to preserve Alstom’s credit profile with a Baa2 rating.
The new terms have been confirmed by Alstom’s board of directors.
“The acquisition of Bombardier Transportation represents a transformational change for Alstom,” says Alstom chairman and CEO, Mr Henri Poupart-Lafarge. “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.
“Bombardier Transportation will bring to Alstom complementary geographical presence to broaden Alstom’s commercial reach in key growing markets, strong product complementarities in rolling stock, strategic scale in services and signalling, industrial capacity in key countries, a leading portfolio offering and additional research and development capabilities to invest in green and smart innovation. Alstom will also welcome new talent and expertise, with the arrival of Bombardier Transportation employees.”
“Today’s announcement marks a significant milestone towards achieving our near-term priorities and repositioning Bombardier as a pure-play business jet company,” says Mr Éric Martel, president and CEO of Bombardier. “The proceeds from this transaction will allow us to begin reshaping our capital structure and start addressing our balance sheet through debt pay down, so that we can achieve the full potential of our incredibly talented employees and our industry leading business jet portfolio.”