Bombardier reaches deal to sell rail division to Alstom

Alstom confirms talks to acquire Bombardier train unit

Including liabilities, the total deal is worth US$8.2 billion, according to Bombardier.

The Quebec company has been dragging a long-term debt of U.S. $9.3 billion and had announced last month that it was studying options to accelerate its deleveraging. Quebec pension firm Caisse de Depot et Placement, which owns 32.5% of Bombardier's train unit, has agreed to sell its stake to Alstom and acquire a minority holding in the combined train company, the report added.

Alstom shares climbed 15% since the start of the year, while Bombardier dropped 13%. It suggests Alstom will offer cash and stocks. Caisse will become Alstom's largest shareholder, and will have two seats on the board. Alstom said it was particularly attracted to BT's "unique" presence in China, where it has developed high-speed trains, and strong presence in Germany and North America.

"No final decision has been made", the France-based company said.

Neither company explicitly addressed whether any jobs will be added or eliminated as a part of the deal.

The wholesale retreat from building everything from high-speed trains in China to streetcars for Toronto means that Bombardier will exist only as a maker of private business jets.

A planned combination of Alstom and Bombardier's Berlin-based rail division would face close antitrust scrutiny, having a near 50% share of the market for electric multiple units and a leading position in Europe's urban transport market, according to analysis by SCI Verkehr.

But its attempt to merge the train business of rival Siemens of Germany failed past year, when the European Union's competition regulator, Margrethe Vestager, said the deal would make Alstom-Siemens overly dominant in high-speed trains and signaling.

Last year, European Union authorities blocked a proposed merger between Alstom and the train division of German industrial conglomerate Siemens AG, arguing the proposed tie-up would result in higher price tags on signalling systems and bullet trains. Bombardier said it expects its net debt to be US$2.5-billion if the transaction is completed.

"We don't see it as a huge issue, " Alstom Chief Executive Henri Poupart-Lafarge said of regulatory hurdles on a conference call.

Editor's note: An earlier version of this story included a typo on the deal value and an error about the assumption of liabilities.

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