Alstom confirmed the proposed deal, in which it will acquire 100% of Bombardier’s shares for between €5.8-6.2bn, in February. 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.
DG Competition, the antitrust arm of the European Commission (EC), can either clear the deal with or without conditions or, if it has serious concerns, open a four-month long investigation.
If approved, the acquisition will consolidate Alstom’s position as the world’s second largest railway equipment manufacturer by revenue, behind China’s CRRC.
A similar EC investigation thwarted Alstom and Siemens' attempts to combine their rail businesses in February 2019. German industrial union IG Metall has also urged the German government to investigate the deal. Bombardier has numerous locations in Germany, notably a major manufacturing plant at Hennigsdorf, Brandenburg, while Alstom’s largest manufacturing site is located at Salzgitter, Lower Saxony.
However, there are several factors which are different in this deal, which may see it get over the line. The combination of Alstom with Bombardier is a smaller transaction than the proposed merger with Siemens, which some analysts estimated would have had a 70% share of the rail equipment market. The deal is also an acquisition rather than a merger, with more complementary rather than competing elements - Bombardier is a smaller player in high-speed rolling stock, for example, and has worked in this area as part of a joint venture with other firms, notably Hitachi in Italy.
There might also be a greater willingness from the EU to sanction the deal, which creates a European industrial champion, than in 2019 in the face of increasing Chinese competition.
“We are aware that markets change, that competition from China is intensifying, and that our rules, which are more than 22-years-old, must evolve as a result,” EU competition commissioner, Ms Margrethe Vestager, told a press briefing on February 9.