Alstom has confirmed the discussions with Bombardier regarding a possible acquisition of Bombardier Transportation by Alstom. The transaction is estimated at USD 7 billion.
Although a final decision has not been made, the discussions are ongoing.
According to Wall Street Journal, Caisse de dépôt et placement du Québec, which owns 32.5% of Bombardier Transportation unit, agreed to sell its stake to Alstom and to acquire a minority holding in the new established company.
In 2019, the revenues of Bombardier Transportation registered a 7% decrease, from USD 8.9 billion to USD 8.26 billion, mainly due to contract estimate revisions, the company says.
Bombardier Transportation unit continued to grow and improve the quality of its backlog with USD 10 billion in new orders, representing a 1% growth against 2018. Backlog reached USD 35.8 billion at year end. Approximately 70% of 2019 orders coming from service contracts, signalling projects and options on rolling stock projects, carrying lower execution risk. Backlog share of services and signalling contracts increased to 48% (42% a year ago).
During the past year, the Transportation division continued to progress through its turnaround, by re-synchronising production and resetting certain project delivery schedules, while also investing to support in-service reliability improvements and funding additional manufacturing and engineering capacity. The higher than anticipated cost to implement these initiatives and to address late-stage legacy projects, mainly concentrated in the U.K., Switzerland and Germany, led to lower earnings and free cash flow for the segment. Over USD 500 million in cost estimate changes embedded in 2019 earnings. In 2019, the division has completed the delivery of several large legacy projects, including Metropolitan Transportation Authority (MTA) in New York City, Crossrail in the U.K. and Toronto Transit Commission (TTC) in Toronto.
Revenues from Bombardier’s sustaining business aircraft and Transportation activities in 2020 are expected to grow organically by double-digit percentage over the USD 13.7 billion revenues recorded from these businesses in 2019. The consolidated revenue growth is also supported by the ongoing production ramp-up of Transportation, driven by the solid orders from the past few years.
Bombardier has 500 customers in over 60 countries, with 500 million passengers relying on its mobility solutions.
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