French rail giant to acquire Bombardier Transportation

French rail giant Alstom has agreed to acquire Bombardier’s rail division after announcing it was in talks over a potential deal on Monday morning.

Alstom has described the deal, which is worth between £4.8 billion to £5.16 billion, as a “step-change” acquisition which will address “the ever-increasing demand for sustainable mobility,” and insists it will be a “value-creating transaction for all stakeholders.”

It is understood that the acquisition will be paid for with a mix of cash and new Alstom shares and could take 12-18 months to complete.

Global institutional investor Caisse de dépôt et placement du Québec (CDPQ) is set to take a 18 per cent stake in Alstom as a result of the deal.

A company statement added: “CDPQ will reinvest c.€2 billion corresponding to 100 per cent of cash proceeds to be received from the sale of its stake in Bombardier Transportation and further invest €0.7 billion in Alstom, outlining its strong belief in the strategic rationale and value creation potential of the combination.”

Bombardier, which is headquartered in Canada, has a huge manufacturing plant at Derby and is one of the city’s biggest employers. It also has a major site at Barton-under-Needwood near Burton. Following the acquisition of its rail business, the company is now expected to turn its attention to the production of aircraft.

Unite and several media outlets have already raised concerns over the sale, but it remains to be seen what lies ahead for workers at Bombardier’s East Midlands sites.

Unite assistant general secretary Steve Turner said: “The Bombardier factory in Derby is a first class facility with a world class workforce.

“Unite has already received assurances from Bombardier that the sale of the company will not affect the Derby factory and its workers and the union will now seek an urgent meeting with Alstom to receive similar guarantees.

“Over the coming months Unite will be working with its sister unions in both the European Union and in North America to ensure that our members’ concerns about the sale are fully understood and that their terms and conditions are in no way diminished.”

Unite regional secretary for the East Midlands Paresh Patel said: “Unite will be watching closely as to what this sale will mean for our members and our priority will be to secure guarantees over our members jobs, pay, terms and conditions of employment.

“This is obviously a highly unsettling time for the workforce and Unite will be providing as much information as quickly as possible about Alstom’s plans including long-term investment for the Derby factory.

“Once Unite fully understands Alstom’s plans, we will be ensuring that our members’ interests at the Derby factory and in its supply chain are fully protected.”

Meanwhile, Henri Poupart-Lafarge, chairman and CEO of Alstom, said he was “thrilled to welcome all the talent and energy of Bombardier Transportation employees” to the company.

He added: “I’m very proud to announce the acquisition of Bombardier Transportation, which is a unique opportunity to strengthen our global position on the booming mobility market. This acquisition will improve our global reach and our ability to respond to the ever-increasing need for sustainable mobility.

“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. We will be thrilled to welcome all the talent and energy of Bombardier Transportation employees. We are deeply committed to step up the turnaround of Bombardier Transportation activities and deliver significant value to all stakeholders, particularly our customers.”