Confirming weeks of rumours, Alstom has announced that it has signed a Memorandum of Understanding with Bombardier Inc to acquire Bombardier’s transportation unit.

The MoU values Bombardier Transportation at between €5.8 and €6.2 billion ($9.4 to $10 billion).

Henri Puopart-Lafarge, chairman and CEO of Alstom announced the merger of the two rail manufacturing giants.

“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.”

Although headquartered in Canada, Bombardier’s transport operations are led from Berlin, Germany. The deal, if approved, could create a European rail champion, a goal which Alstom previously pursued in discussions with Siemens, with whom Bombardier also pursued merger talks.

Puopart-Lafarge acknowledged that the two companies share similar operating areas.

“Bombardier Transportation will bring to Alstom complementary geographical presence and industrial footprint in growing markets, as well as additional technological platforms,” he said.

Bombardier representatives also welcomed the deal’s announcement.

“With a shared commitment to the next generation of green and digital rail solutions, a combined company would benefit from economies of scale resulting into improved investment and innovation capabilities, and a streamlined investment pipeline,” said Eric Prud’Homme, head of external communications at Bombardier Transportation.

In Australia, Alstom and Bombardier both have significant manufacturing operations. Bombardier manufactures diesel multiple units and light rail vehicles in Dandenong, Victoria while Alstom has a manufacturing base in Ballarat where it produces the X’Trapolis trains for the Melbourne network. Additionally, Alstom has been confirmed as the manufacturer of new rollingstock for Perth’s Metronet project, and will construct a local manufacturing facility in Western Australia.

Previous merger discussions between Siemens and Alstom drew the attention of the Australian Competition and Consumer Commission, which noted that a merger would raise competition concerns, however in the field of signalling. Ultimately, the European Commission blocked the proposed deal.

In the MoU announcement, Poupart-Lafarge said that all existing employees of Bombardier Transportation would continue to work for Alstom once the deal is completed.

“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,” he said.

Alstom expects that, subject to approvals from regulatory and anti-trust authorities, the deal will be closed in the first half of 2021.

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