Alstom said Monday it wanted to buy Bombardier's rail division in a deal that would help it compete with China while allowing indebted Bombardier to speed up an ongoing fire sale.

Alstom said talks about taking over Bombardier Transport were "ongoing", with media reports putting the likely price tag at $7 billion.

"No final decision has been taken," Alstom said in a statement.

Analysts said the French company hopes to add scale in a sector where China's state-owned CRCC is the world's largest rolling stock manufacturer.

Alstom's move comes a year after the European Commission blocked an attempt at a mega-merger of its rail activities with those of Germany's Siemens, which would have created a European rail champion.

Quebec pension firm Caisse de Depot et Placement has a 32.5 percent stake in Berlin-based Bombardier Transport, which last year posted sales of $8.3 billion, ending 2019 with $35.8 billion of business on its order books.

Alstom's 2018-2019 sales came in at $8.1 billion and the firm had outstanding orders of $43 billion at the end of 2018.

Heavily-indebted Bombardier, which started out making snowmobiles 80 years ago, embarked in 2015 on a major restructuring and said in January it was planning a range of divestments.

Last year, burdened by a debt pile of some $9 billion—most of it long-term— Canada's top manufacturer agreed to sell off its regional jet programme to Japan's Mitsubishi Heavy Industries for $750 million.

In 2018 it had sold control of the CSeries medium-haul jet programme to Airbus which renamed it the A220.

Last week, Bombardier said it would sell off to Airbus and the Quebec government —where the firm has some 14,000 staff and supports around another 40,000 jobs—its remaining 33.58 percent stake in the programme.

Bombardier also recently announced it was selling off its aerostructures business to Spirit AeroSystems of the US for more than $1 billion in cash and debt.

In aeronautics, the Canadians, with a workforce of some 36,000, retain their profitable Learjet, Challenger and Global Express business jets activity.

On January 16, Bombardier had announced it was "actively pursuing alternatives that would allow us to accelerate our debt paydown," while again revising downward its preliminary 2019 revenues.

Alstom, which makes France's TGV high-speed trains, employs 36,300 staff, a quarter of them in France.

Chinese competition

Between them the two firms have a virtual monopoly on rolling stock in France and regularly work in tandem on infrastructure such as metros and the Paris RER regional train network.

Adding Bombardier Transport would position Alstom as a global rival to China's giant CRCC which boasted sales of around $30 billion in 2018.

Although some 90 percent of its sales are in China, China Railway Construction Corporation (CRCC) has been spreading its tentacles further afield notably with tram investments in Portugal.

It has also intimated, according to weekend British media reports, a readiness to engage in construction of Britain's controversial HS2 high-speed project.

Alstom had already held up the Chinese threat in trying to merge with Siemens only for Brussels to rule a merged company would have had an overly dominant market position in Europe.

Alstom CEO Henri Poupart-Lafarge, who began his career at the World Bank, has targeted "internal investment and external partnerships" but also "acquisitions" as the way ahead after the derailed Siemens merger.

Alstom has focused on transport after five years ago ceding its energy interests to General Electric.

It is now debt free with cash in the bank.

---

---

© 2020 AFP