Alstom reaches preliminary deal to buy Bombardier train unit, report says

MONTREAL — Bombardier Inc. has reached a preliminary deal to sell its train division to French rail giant Alstom SA for more than US$7 billion, the Wall Street Journal reported Sunday.

The news outlet quotes unnamed sources as saying the deal could be announced as soon as Monday.

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Bombardier and Alstom did not immediately respond to a request for comment on Sunday from The Canadian Press.

The reported deal with Alstom would come after Bombardier, which is carrying long-term debt of US$9.3 billion, announced last month it was studying its options to accelerate its deleveraging, or reducing debt by selling assets.

Bombardier reported a loss of US$1.61 billion for 2019.

The sale of its train division would add to the list of assets the company has sold in the last five years, which includes Q400 turboprop planes, the CRJ regional jet program and the former C Series aircraft.

The sale would mean the Quebec company, which was founded in Valcourt, Que., in 1942 as a snowmobile manufacturer, will focus its business on high-margin private jets.

According to the Wall Street Journal, the Paris-based train maker is expected to use mostly cash and some stock to complete the transaction.

Quebec's pension fund manager, the Caisse de depot et placement du Quebec, has reportedly agreed to sell its 32.5 per cent stake to Alstom in return for a minority stake in the combined company, according to the sources quoted in the article.

On Sunday, a spokesman for Caisse refused to confirm the information.

"The Caisse never comments on rumours or the trading opportunities it may or may not consider," Maxime Chagnon wrote by email.

Bombardier Transportation is based in Berlin and employs some 1,000 workers at factories in Quebec's Bas-St-Laurent region and in St-Bruno-de-Montarville, on Montreal's South Shore.

Claude Michaud, the head of the union representing employees at the plant in La Pocatiere, Que. said by telephone on Sunday that he had not been informed of the deal by the employer.

Bombardier announced last week it had sold its remaining stake in the A220 jetliner program, which represented its last commercial aviation venture.

This report by The Canadian Press was first published Feb. 16, 2020.

Companies in this story: (TSX:BBD.B)

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