Bombardier’s deal to sell its rail business is going through — but at a lower price


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French transport infrastructure company Alstom has lowered its offer price to acquire Canadian Bombardier Inc’s rail business by US$350 million, the companies said on Wednesday.

Bombardier announced Wednesday that it has signed a definitive sale agreement for the sale of its transportation business to Alstom SA

Under the revised terms, the deal gives Bombardier’s rail unit an enterprise value of US$8.4 billion, which would allow the Canadian firm to pay down some of its US$9.3 billion in debt.

Bombardier, which has been under pressure due to higher rail costs, said it expects net proceeds of about US$4 billion from debt reduction and Canadian pension fund la Caisse’s equity position of US$2.2 billion. Last month, it reported a loss of US$319 million after missing quarterly earnings estimates.

The loss prompted Alstom, which first made an offer in February for Bombardier’s transportation business, to revisit the deal.

Alstom said in August the recent quarterly results point to Bombardier’s transportation unit’s ongoing challenges, but believes it can restore the unit’s profitability in the medium-term.

In July, Alstom secured European Union antitrust approval to acquire the Bombardier rail business, in a deal worth up to 6.2 billion euros (US$7.30 billion), aimed at making Alstom the world’s second-largest rail maker after China’s CRRC Corp.

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