Alstom has completed the acquisition of Bombardier Transportation.
By integrating Bombardier Transportation, Alstom aims to strengthen its leadership in the growing sustainable mobility market by reaching a critical size in all geographies and integrating further solutions and assets to better serve its customers worldwide.
“Today is a unique moment for Alstom and the mobility sector worldwide, with the creation of a new global leader centered on smart and sustainable mobility. More than ever, the world has to engage in a deep environmental and social transition to be able to address the great challenges of urbanization, equal opportunity to economic development and climate change,” said Henri Poupart-Lafarge, chairman and CEO of Alstom. “Transportation, essential to the working and social life but with great environmental impact is at the heart of this transition. Our responsibility, together with the 75,000 people of Alstom today, is to transform our unique set of assets created by this transaction into the enabler of this necessary transformation. Our responsibility is to bring the innovation required for such extreme challenges and that all communities throughout the world, as they are traveling to meet loved ones or to work, can have access to the same quality of service and efficiency, while caring for our planet.”
A group serving a growing market
The rail market is supported by fundamental growth drivers, such as accelerated urbanization, public investment strategies and the worldwide push for green and digital transformation of transport systems. Despite the pandemic, recent stimulus announcements clearly confirm the development of sustainable mobility and of rail as a long-term priority. The rail manufacturing market is expected to grow at a 2.3 percent CAGR by 2025.
The group will have commercial reach in all geographies thanks to the complementarities of the two companies. While the Alstom Group already had an established customer base in France, Italy, Spain, India, South East Asia, Northern Africa and Brazil, Bombardier Transportation will bring strong customer proximity in strategic markets such as the United-Kingdom, Germany, the Nordics, China and North America.
As previously announced, the headquarters of Alstom of the Americas will be based in Montréal, Québec – leading all operations in the region – as well as establishing a center of excellence for design and engineering that will build on Québec’s strengths in innovation and sustainable mobility.
The group will offer mobility operators and network providers products and solutions throughout the entire rail value chain. Integrating Bombardier Transportation, Alstom will have a complete rail portfolio. In Rolling Stock, its portfolio will range from light rail to very high-speed trains, including new strategic products such as people mover and monorail. The group will be able to serve its clients in the services space with a wider maintenance facilities network and larger predictive maintenance capabilities. With a fleet of 150,000 vehicles, Alstom says will have the largest installed base worldwide, a unique springboard to further expand its leadership in Services. Its signaling product line gains is also expanding in terms of revenue, acquiring technological capabilities and commercial capacities in strategic markets, complementary to Alstom’s.
Bombardier Transportation brings hubs of expertise for locomotives and bogies in Germany, monorail and people movers in Canada, suburban and regional trains in France and the United-Kingdom, traction in Sweden, along with engineering centers in Thailand. It also brings seven joint ventures in China. With those immediate strategic additions to Alstom’s footprint, the enlarged group has access to deeper industrial expertise and is closer to its customers.
Bringing together 17,500 engineering and R&D talents from both groups, consolidating 10,000 patents and incorporating additional technologies from Bombardier Transportation, the group will be able to develop solutions at a faster pace and on a larger scale to make mobility of tomorrow a reality.
Confirmed long-term value creation for all stakeholders
Customers and passengers will benefit from the proximity of Alstom’s employees and sites, innovation capacities, a comprehensive rail product and solutions portfolio and commitment to an efficient delivery.
The employees of Bombardier Transportation joined the Alstom Group as of Jan. 29, 2021. These new talents will enrich Alstom’s operational profile at all levels and build, with Alstom’s employees, one agile, inclusive and responsible Alstom team.
Alstom says it reaffirms its commitments to create a positive impact in the communities it operates, to provide employees with the best working environment and experience and to be at the highest standards in terms of responsible business practices.
Alstom confirms its objective to generate €400 million (US$483.8 million) cost synergies on annual run rate basis by the fourth to fifth year and to restore Bombardier Transportation’s margin to a standard level in the medium term. The transaction is expected to be double digit EPS accretive from year two post-closing and to preserve Alstom’s credit profile with a Baa2 rating.
CDPQ (Caisse de dépôt et placement du Québec) has become Alstom’s main shareholder with 17.5 percent of Alstom’s share capital. Bouygues now holds approximately six percent of Alstom’s share capital.
In accordance with the resolutions approved by the Alstom’s Shareholders’ Meeting held on Oct. 29, 2020, Kim Thomassin, representing CDPQ, and Serge Godin joined Alstom’s Board of Directors. Benoit Raillard has been appointed by Alstom’s Board of Directors as observer (censeur) upon CDPQ’s proposal.
The reference price was established at €5.5 billion (US$6.6 billion), at the bottom of the range of €5.5 billion (US$6.6 billion) to €5.9 billion (US$7.1 billion) communicated on Sept. 16, 2020. The proceeds for the acquisition were established at €4.4 billion (US$5.3 billion), which include the impact of the minimum cash adjustment mechanism based on a negative net cash position of Bombardier Transportation as of Dec. 31, 2020 and other further contractual adjustments for an amount of €1.1 billion (US$1.3 billion).
The acquisition was financed through the rights issue of around €2 billion (US$2.4 billion) completed on Dec. 7, 2020, and part of the senior bond issuance of €750 million (US$907.2 million) completed on Jan. 11, 2021, and by the reserved capital increases to the benefit of affiliates of CDPQ and Bombardier Inc., in total amounts, respectively, of €2.6 billion (US$3.1 billion) and €500 million (US$604.8 million) completed as part of the closing of the transaction.
