PARIS/MONTREAL (Reuters) – Alstom’s (ALSO.PA) board will meet late on Wednesday to discuss buying Bombardier’s (BBDb.TO) rail unit, sources familiar with the matter said, and a media report said the French train maker had valued the business at just under $7 billion.
French TV station BFM reported on its website that Alstom was set to make a firm offer for Bombardier’s Berlin-based rail division.
Three industry sources familiar with the talks said a deal would involve Alstom acquiring Bombardier’s largest unit in terms of revenue, but cautioned an agreement was not finalized.
Bombardier shares were up almost 8% in afternoon trading.
Alstom and Bombardier declined to comment.
A deal would help Montreal-based Bombardier improve its financial footing. The company, which will report its results on Thursday, faces higher-than-expected-costs in its rail division and $9.7 billion in outstanding debt, according to Refinitiv data.
An acquisition would help Alstom compete more effectively against Chinese giant CRRC Corp and in the U.S. market, a fourth industry source said. (601766.SS)
Desjardins analyst Benoit Poirier said in a note to clients that a $7 billion offer seemed high “considering recent operational challenges” in the rail unit.
A planned tie-up between Alstom and Germany’s Siemens AG (SIEGn.DE) collapsed last year due to European regulatory concerns.
