French rail giant Alstom has officially struck a deal to acquire Bombardier Transportation, which includes the Quebec company’s train division.
Alstom issued a statement Monday afternoon to confirm the sale after initially saying earlier in the day the two companies were in discussion over a potential sale.
Under the agreement, Bombardier’s transportation unit will be sold to Alstom for US $8.2 billion.
“I’m very proud to announce the acquisition of Bombardier Transportation, which is a unique opportunity to strengthen our global position on the booming mobility market,” said Alstom CEO Henri Poupart-Lafarge in a statement.
As part of the transaction, the Caisse de dépôt et placement du Québec — the province’s pension fund manager — is also becoming the Alstom’s largest shareholder with an 18 per cent stake in the company.
The Caisse’s stake in Bombardier Transportation will become shares in Alstom. It will have two representatives to sit on Alstom’s Board of Directors and it will also appoint a board observer.
Caisse CEO Charles Emond said in a statement the transaction will “provide opportunities to grow and develop expertise in Quebec.”
The news comes after the Wall Street reported on Sunday that a tentative deal worth more than US$7 billion had been reached between the two companies.
Bombardier Transportation’s headquarters are based in Germany. Their Quebec operations employ about 1,000 workers at the La Pocatière plant in the Bas-Saint-Laurent region, as well as in Saint-Bruno-de-Montarville, in the southern suburbs of Montreal.
The deal comes as Bombardier is also exiting the commercial aviation business. The debt-ridden company announced last week it was selling its remaining stake in the A220 jetliner program.
There have been rumours swirling around Bombardier potentially selling one of its two divisions: trains and business jets. With this sale, Bombardier will be left to focus on the latter.
“Going forward, we will focus all our capital, energy and resources on accelerating growth and driving margin expansion in our market-leading US$7 billion business aircraft franchise,” CEO Alain Bellemare said in a statement Monday.
The Montreal-based company has sold several of its divisions under Bellemare. Last month, Bombardier announced it was trying to reduce its debt and pursue strategic options.
Quebec, France welcome deal
Quebec Premier François Legault said in a statement that he was pleased that the province’s interests will be guided by the Caisse. He said he was reassured to see that Alstom plans to develop the La Pocatière, Sorel-Tracy and Saint-Bruno facilities.
“Quebec has a great and long history of collaboration with France, and I am convinced that this shared history will contribute to the success of this partnership,” he said.
The French government, for its part, said it will ensure the acquisition of Bombardier’s train division creates value for the European rail industry and the staff of both companies.
Finance Minister Bruno Le Maire said the deal will be submitted to anti-trust regulators for approval.
The Confédération des syndicats nationaux (CSN), one of Quebec’s largest labour federations, wants to know more details about the factories in La Pocatière and Sorel-Tracy.
— With files from the Canadian Press and Reuters