Alstom gets EU nod to acquire Bombardier's rail business
03 Aug 2020
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France’s Alstom SA has secured antitrust approval from the European Commission to acquire Canadian rival Bombardier Inc’s rail business, in a deal that will make it the world’s second-largest rail maker after China’s CRRC Corp.
The deal valued up to 6.2 billion euros ($7.4 billion) contrasted with its failed attempt last year to combine its rail assets with Siemens AG, which was vetoed by regulators because the companies refused to offer more concessions.
The commission’s approval for the transaction is conditional on the proposed engagements that include:
- Transfer of Bombardier Transportation’s contribution to the V300 ZEFIRO very high-speed train and an offer of IP licence to Hitachi for the train co-developed by Hitachi and Bombardier Transportation for use in future very high-speed tenders in the UK;
- Divestment of the Alstom Coradia Polyvalent and the Reichshoffen production site in France;
- Divestment of the Bombardier TALENT 3 platform and dedicated production facilities located within the Hennigsdorf site in Germany
- Providing access to certain interfaces and products for some of Bombardier Transportation’s Signalling On-Board Units and Train Control Management Systems (TCMS); and
- Compliance with all applicable social processes and consultations with employee representatives' bodies.
The transaction, however, remains subject to further regulatory approvals in several other jurisdictions and customary closing conditions.
Alstom and Bombardier welcome the European Commission’s (EC) decision for conditional clearance of the proposed acquisition of Bombardier Transportation by Alstom.
“Thanks to the comprehensive remedies offered to solve the competition concerns in the areas of very high-speed, mainline trains and mainline signalling, the Commission has been able to speedily review and approve this transaction,” European Competition Commissioner Margrethe Vestager said in a statement.
The Commission said Alstom will sell a French rail factory in Reichshoffen, its regional train unit Coradia Polyvalent, and a Bombardier commuter trains division and related production facilities at its Hennigsdorf site in Germany.
The company also agreed to sell Bombardier’s stake in a consortium with Hitachi and provide access to some products within Bombardier’s train control systems and signalling units to rivals.
Alstom said it expects to complete the deal in the first half of 2021.
French finance minister Bruno Le Maire welcomed the EU green light.
“Today’s decision marks a positive step for the growth opportunities of the European rail sector, which is a world leader thanks to strong domestic competition and commitment to the next generation of green and digital mobility solutions,” Bombardier said.
Siemens said it was reviewing the decision and would decide in due course about further action.
Alstom’s Force Ouvriere union said the operation was financially risky and aimed only at becoming bigger, even if it meant some parts of the company had to be cut off.
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