Alstom confirms talks underway to buy Bombardier Transportation

PARIS (Reuters) – French transport infrastructure company Alstom (PA:) said on Monday it was in talks over a possible acquisition of the train business of Canadian company Bombardier (TO:), which could be worth $7 billion on an enterprise value basis.

“Alstom confirms being in discussions with Bombardier regarding a possible acquisition of Bombardier Transportation by Alstom. Discussions are ongoing. No final decision has been made,” Alstom said in a statement.

A source familiar with the matter told Reuters on Sunday that Alstom was close to agreeing a deal to buy Bombardier’s train business, which will give the unit an enterprise value of $7 billion.

The takeover would help Alstom compete more effectively with Chinese rail giant CRRC Corp Ltd (SS:), after European regulators last year blocked Alstom from merging with Germany’s Siemens (DE:).

Any deal would also follow Bombardier’s decision last week to sell off its stake in the A220 passenger jet program to Airbus (PA:) and the Quebec government.

Bombardier has been struggling to contain higher rail costs generated by a few problematic contracts in its nearly $36 billion order backlog.

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