Alstom confirms talks underway to buy Bombardier Transportation

PARIS (Reuters) – French transport infrastructure company Alstom (ALSO.PA) said on Monday it was in talks over a possible acquisition of the train business of Canadian company Bombardier (BBDb.TO), which could be worth $7 billion on an enterprise value basis.

“Alstom confirms being in discussions with Bombardier regarding a possible acquisition of Bombardier Transportation by Alstom. Discussions are ongoing. No final decision has been made,” Alstom said in a statement.

A source familiar with the matter told Reuters on Sunday that Alstom was close to agreeing a deal to buy Bombardier’s train business, which will give the unit an enterprise value of $7 billion.

The takeover would help Alstom compete more effectively with Chinese rail giant CRRC Corp Ltd (601766.SS), after European regulators last year blocked Alstom from merging with Germany’s Siemens (SIEGn.DE).

Any deal would also follow Bombardier’s decision last week to sell off its stake in the A220 passenger jet program to Airbus (AIR.PA) and the Quebec government.

Bombardier has been struggling to contain higher rail costs generated by a few problematic contracts in its nearly $36 billion order backlog.

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