Bombardier announced its decision to focus solely on business aviation and plans to accelerate its deleveraging through the sale of its rail business.
"Today marks an exciting new chapter for Bombardier. Going forward, we will focus all our capital, energy and resources on accelerating growth and driving margin expansion in our market-leading $7.0 billion business aircraft franchise. With a stronger balance sheet after the completion of this transaction, an industry-leading portfolio of products, a strong backlog, and a rapidly growing aftermarket business, we will compete in this market from a position of strength," said Alain Bellemare, President and Chief Executive Officer, Bombardier Inc.
Bombardier has signed a Memorandum of Understanding (MOU) with Alstom SA and the Caisse de dépôt et placement du Québec ("la Caisse") for the sale of its transportation business to Alstom. Under the transaction, the business aviation leader and la Caisse will sell their interests in Bombardier Transportation to Alstom on the basis of an enterprise value of $8.2 billion.
Total proceeds, after the deduction of debt-like items and transferred liabilities, including pension obligations, and net of BT cash, are expected to be approximately $6.4 billion, subject to upward adjustments of up to $440 million.
The transaction recognises the significant value created at transportation since the beginning of the turnaround.
"Selling the rail business will allow us to reshape and redefine our capital structure. Adding a substantial amount of cash to the balance sheet, and removing la Caisse preferred equity in Transportation, will change the game for Bombardier," continued Bellemare.
Signing of the MOU has been unanimously approved by each of Bombardier and Alstom's Board of Directors.