- Bombardier (BBD.B) has definitively agreed to sell its transport business to French multinational Alstom but has substantially dropped the price in the eleventh hour
- Through the new definitive agreement, Bombardier and institutional investor Caisse de dépôt et placement du Québec will sell their joint interests in Bombardier Transport for approximately C$11.07 billion
- This is around a $461 million drop in price, compared to the previous memorandum of understanding with Alstom
- Pending regulatory and shareholder approvals, the deal is expected to close in the first quarter of 2021
- Bombardier (BBD.B) is up 7.3 per cent and is currently trading at 44 cents per share
Bombardier (BBD.B) has definitively agreed to sell its transport business to French multinational Alstom but has substantially dropped the price in the eleventh hour.
Through the new definitive agreement, Bombardier and institutional investor Caisse de dépôt et placement du Québecwill sell their joint interests in Bombardier Transport for approximately C$11.07 billion. This is around a $461 million drop in price, compared to the previous memorandum of understanding.
Once complete, the sale will net Bombardier around $5.27 billion in net proceeds, $771 million of which is in Alstom shares.
Pending regulatory and shareholder approvals, the deal is expected to close in the first quarter of 2021.
The price drop comes on the back of a a difficult run for Bombardier, which entered capital restructuring trouble in 2019, following poor financial results connected to its rail operations.
The company’s financial issues have been further exacerbated by the advent of the COVID-19 pandemic, which triggered an industry-wide downturn earlier this year.
As a result, the company’s share price has fallen by more than 40 per cent since January, prompting management to announce an accelerated deal with Alstom in February.
Éric Martel, President and CEO of Bombardier, said the final agreement marks a significant milestone towards achieving the company’s near-term priorities, which would reposition it into the business jet sector.
“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,” he said.
Bombardier (BBD.B) is up 7.3 per cent and is currently trading at 44 cents per share at 10:45pm EDT.
