Alstom confirms Bombardier merger talks
French train manufacturer Alstom has confirmed talks to purchase the rail division of Canadian firm Bombardier are ongoing.
The proposed deal could be worth $7bn on an enterprise value basis, Reuters has reported.
Reports of the merger came last week, quoting a French TV station, that Alstom’s board was set to make an offer.
“Alstom confirms being in discussions with Bombardier regarding a possible acquisition of Bombardier Transportation by Alstom,” the company said in a statement.
“Discussions are ongoing and no final decisions have been made.”
Alstom’s shares are up 2.88 per cent whereas those of Bombardier are down 1.20 per cent.
The two companies have a current combined revenue of $17bn.
Alstom manufactures locomotives from France’s iconic TGV high speed trains to trams.
According to reports, the company hopes the merger will help it compete with China’s CCRC Corp, the world’s largest train maker.
In 2019, Alstom proposed a merger with German industrial conglomerate Siemens in order to increase its scale.
However, this was blocked by the European Commission over concerns competition could be adversely affected.
The French government is reportedly in favour of the merger having criticised the EU stance over the Siemens deal.
Bombardier has extensive operations in the UK including its factory in Derby which builds rolling stock for several major projects including Crossrail.
The company has submitted a joint bid with Hitachi to build the trains for the controversial High Speed 2 link.
Alstom and Siemens have submitted separate bids to build the trains which could run at up to 200mph.
Last week’s reports also said Bombardier was seeking a partner to share the costs of its rail manufacturing operations.
The confirmation comes a week after Bombardier sold its remaining shares in the A220 airliner programme to Airbus.