Montreal-based Bombardier has agreed to sell its transportation business to France’s Alstom. Under the agreement, Bombardier and Caisse de dépôt et placement du Québec will sell their interests in Bombardier Transportation to Alstom in a deal that values the business at US$8.4 billion. The transaction is expected to wrap up in Q1 2021. CDPQ invested in Bombardier Transportation in 2016.
MONTREAL, Sept. 16, 2020 (GLOBE NEWSWIRE) — Bombardier (TSX: BBD.B) today announced that it has signed a definitive Sale and Purchase Agreement (SPA), with Alstom SA and the Caisse de dépôt et placement du Québec (“la Caisse”) for the sale of its Transportation business to Alstom.
Under the SPA, Bombardier and la Caisse will sell their interests in Bombardier Transportation to Alstom on the basis of an enterprise value of $8.4 billion (EUR 7.15B), reflecting a $350M (EUR 300M) price reduction from the previously announced Memorandum of Understanding (MOU), offset by the impact of a more favourable currency exchange rate.
Based on Bombardier Transportation’s current operational performance and market conditions, total proceeds after the deduction of debt-like items, transferred liabilities and estimated closing adjustments1 are expected to be $6.2B, based on the lower end of the range agreed to in the SPA. After deducting la Caisse’s equity position of $2.2B billion, Bombardier expects net proceeds of ~ $4.0B2. This amount includes $585M (EUR 500M) of Alstom shares for a fixed subscription price of EUR 47.50 per share, monetizable after a three-month lock-up post-closing.
“Today’s announcement marks a significant milestone towards achieving our near-term priorities and repositioning Bombardier as a pure-play business jet company,” said Éric Martel, President and Chief Executive Officer, Bombardier Inc. “The proceeds from this transaction will allow us to begin reshaping our capital structure and start addressing our balance sheet through debt paydown, so that we can achieve the full potential of our incredibly talented employees and our industry leading business jet portfolio.”
The signing of the SPA follows the completion of the required works council consultations. With regulatory approvals obtained from several jurisdictions, including the European Commission, the transaction closing is now expected in the first quarter of 2021, subject to the completion of the remaining regulatory reviews and other customary closing conditions, as well as Alstom shareholders’ approval at the company’s upcoming October 29, 2020 Extraordinary Shareholders’ Meeting.
With nearly 60,000 employees across two business segments, Bombardier is a global leader in the transportation industry, creating innovative and game-changing planes and trains. Our products and services provide world-class transportation experiences that set new standards in passenger comfort, energy efficiency, reliability and safety.
Headquartered in Montréal, Canada, Bombardier has production and engineering sites in over 25 countries across the segments of Aviation and Transportation. Bombardier shares are traded on the Toronto Stock Exchange (BBD). In the fiscal year ended December 31, 2019, Bombardier posted revenues of $15.8 billion. News and information are available at bombardier.com or follow us on Twitter @Bombardier.
1 Includes the impact from obligations related to achieving a minimum cash balance at Bombardier Transportation at the end of 2020.
2 While the SPA is based on EUR currency, the parties have agreed that net cash proceeds to Bombardier will be paid in USD at the current €/USD exchange rate.
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