Alstom signs MOU to acquire Bombardier's rail business

French train manufacturer Alstom announced yesterday that it has signed a memorandum of understanding (MOU) to acquire Canada-based Bombardier Inc.'s rail business for $6.2 billion to $6.7 billion.

The acquisition will be funded with a mix of cash and new Alstom shares. The acquisition aims to offer the combined companies strengthened product lines and strategic industrial capacity, as well as address "the ever increasing demand for sustainable mobility," Alstom officials said in a press release.

"Bombardier Transportation will bring to Alstom complementary geographical presence and industrial footprint in growing markets, as well as additional technological platforms. It will significantly increase our innovation capabilities to lead smart and green innovation," said Henri Poupart-Lafarge, chairman and chief executive officer of Alstom.

Alstom also will further develop Bombardier Transportation's presence in Quebec.

"We see great geographic and product complementarity with potential to translate into increased capacity to respond to the growing global demand for rail," said Danny Di Perna, president of Bombardier Transportation, in a press release. With a shared commitment to the next generation of green and digital rail solutions, a combined company would benefit from economies of scale resulting into improved investment and innovation capabilities, and a streamlined investment pipeline.”

Selling its rail business will allow Bombardier Inc. to focus exclusively on its aviation business and accelerate its deleveraging, Bombardier officials said.