The terms of the agreement have been altered to reflect the up-to-date situation. The parties have agreed to a 300 million euro reduction. If there are no further downward adjustments linked to the net cash protection mechanism, the price range for the acquisition of 100 percent of the shares of Bombardier Transportation will be 5.5 billion euros to 5.9 billion euros.
Alstom expects the proceeds are likely to amount to up to 5.3 billion euros. This figure is based on estimated potential post-closing adjustment and obligations linked to the net cash protection mechanism, compared to the range of 5.8 billion euros to 6.2 billion euros announced on 17 February 2020.
The financing structure remains unchanged. Following the transaction, CDPQ will become Alstom’s largest shareholder with around 18 percent of the share capital and voting rights.
Alstom remains firm that there is a strong strategic rationale for its acquisition of Bombardier Transportation. It believes it can turn the company’s fortunes around. The French rolling stock manufacturer confirmed its objective to deliver 400 million euro run rate cost synergies in year 4 to 5 and to restore Bombardier Transportation’s margin towards standard level in the medium term. Alstom also expects the transaction to reach double digit EPS accretive in year 2 post-closing and to preserve its credit rating of Baa2.
Alstom’s Board of Directors has approved the new terms. The parties believe the transaction will close in the first quarter of 2021, depending on regulatory approvals and customary closing conditions. An extraordinary shareholders’ meeting will take place on 29 October 2020.
