Alstom authorised by the EU to acquire Bombardier

  •   03/08/2020 - 11h53
  •   HARMANT Adeline

During Friday's session, we learned that the Alstom group has obtained EU approval for the takeover of Bombardier Transportation. Thanks to this operation, Alstom will thus become the world number two in the rail sector from the first half of 2021.

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Alstom authorised by the EU to acquire Bombardier
Image copyright: Mike Mozart - Flickr

How will the new package be composed?

The new entity should employ a total of 76 000 employees with a turnover of €15.5 billion and will thus be able to compete with the world leader, namely the Chinese CRRC. The European railway industry will thus benefit from this good news, as indicated by the Minister of Economy Bruno Lemaire, who had previously criticised the European Commission's veto on this subject.

To address the competition concerns raised, Alstom had made several proposals, including a commitment to divest its Coradia Polyvalent trains for the French market and its production site in Reichshoffen. Several potential buyers were interested in this plant and it is Alstom which will choose the new buyer, which is likely to be a regional competitor. The Minister Delegate for Industry, Agnès Pannier-Runacher said that the government would be particularly vigilant to the situation of this production site, which is to be sold by the new entity and in order to guarantee activity and employment there in the long term.

 

Other divestments planned by Alstom and Bombardier to avoid a dominant position :

The new group will also dispose of the Bombardier Talent 3 platform selling self-propelled engines in Germany and Austria and the Hennigsdorf plant in Germany as well as Bombardier Transportation's contribution in Zefiro, a high-speed train platform developed in collaboration with Hitachi.

It should be recalled that the French group had announced in mid-June in Brussels its plan to acquire its competitor Bombardier Transport for €6 billion. Previously, the threat of competition from China had been put forward to justify the takeover of Alstom by Siemens, an operation that was blocked by the EU in 2019 for fear of an overly dominant position in Europe in rail signalling and high-speed trains.

In the case of the acquisition of Bombardier, there is less overlap, making the operation easier to validate.

 

Reminder about the two entities:

Bombardier Transportation achieved sales of $8.3 billion in 2019 with an order backlog of more than $35.8 billion. It is one of the branches of Bombardier, 32.5% owned by the Caisse de dépôt et de placement du Québec, which also has the largest French rail plant in Crespin in the North.

For its part, Alstom owns various smaller sites and has ended 2019 with a turnover of €8.2 billion and an order book of €40.9 billion. Although the health crisis may have had an impact on the current financial year, Alstom believes that it has sufficient cash flow to deal with it.