[EU / Expert] Bombardier and Alstom in talks to combine their rail activities (+context) [updated]

This article was posted on 22.01.2020, and updated on 13.02.2020 (new information added). Scroll down to see the update.

Update 13.02.2020

After the Siemens – Alstom merger failed to come into life, a new attempt is being made to create a stronger than ever European railway manufacturer. This time the French company is taking the initiative. As German business newspaper Handelsblatt reports: Alstom is set to acquire the entire Bombardier Transportation division. This is what we know so far.

Handelsblatt reports: Alstom buys Bombardier Transportation for EUR 7 billion. And while this information is still unconfirmed, the German newspaper expects that the deal will be made public on 13.02.2020. Stay tuned for further updates.

Our original article from 22.01.2020:

Hey, now we have all three possible combinations. Three main actors in the European railway industry keep on dancing around each other. Bloomberg reports that allegedly now, Bombardier and Alstom are exploring the option to merge their rail units. A short overview of the main events since 2017:

  • Why? China’s CRRC is the biggest manufacturer of rolling stock in the world and is increasingly active on European railways market, the last market where CRRC has not yet a substantial market share
  • Several years ago, Siemens and Bombardier were already talking about a possible alignment of their rail portfolios until Siemens decided to start negotiations with Alstom instead.
  • In 2019 Siemens and Alstom made a concrete plan to form a ‘European champion,’ but the European Union decided to block the merger. There were concerns that the new company would become too dominant in several segments of the European market (signaling, for example). EU commissioner Violeta Bulc did not expect that CRRC would not become an imminent threat, at least not in the short term.
  • Since then CRRC made several significant moves, it decided to buy Vossloh Locomotives in Kiel and landed contracts for the delivery of new locomotives (Rail Cargo Hungaria) and light rail.
  • But, the Vossloh plan is not yet a done deal. There is strong political opposition in Germany – that has to approve the sale, and not yet has done so.
  • Now we get the first indication that the third possible combination is being ‘explored’: Bombardier and Alstom
  • When you read the Bloomberg article you see that the Chinese competition is not the only concern for Bombardier – The company is selling business units to get itself back in a more stable financial position