The purchase of Bombardier Transportation by Alstom has taken the next step forward, with a definitive Sale and Purchase Agreement signed by the two parties.
The sale involves a €300 million ($486m) write-down of the value of Bombardier Transportation from the figure quoted in the Memorandum of Understanding which announced the sale process.
When the MoU was announced in February, Bombardier Transportation was valued at between €5.8 and €6.2 billion ($9.4 to $10bn). The revised price values Bombardier’s transport business at €5.5 to €5.9bn ($8.9 to 9.5bn). Alstom expects the proceeds will likely amount to up to €5.3bn based on post-closing adjustment and obligations.
Henri Poupart-Lafarge chairman and CEO of Alstom said the sale would strengthen Alstom’s presence in the market.
“Bombardier Transportation will bring to Alstom complementary geographical presence to broaden Alstom’s commercial reach in key growing markets, strong product complementarities in rolling stock, strategic scale in services and signalling, industrial capacity in key countries, a leading portfolio offering and additional R&D capabilities to invest in green and smart innovation,” he said.
Éric Martel, president and CEO of Bombardier Inc said the sale would adjust the profile of the business.
Today’s announcement marks a significant milestone towards achieving our near-term priorities and repositioning Bombardier as a pure-play business jet company,” he said. “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.”
According to a statement from Alstom, the company expects to find synergies of €400m ($648m) in four to five years after the sale.