The merger of rolling stock giants Alstom and Bombardier Transportation was completed in February 2021. The Snow Lion Telegram channel has published a brief analysis of why the French company spent billions on the asset and the role played by Quebec’s pension fund. ROLLINGSTOCK publishes the translated full version of the feature.
Key M&A objectives
1. Create a CRRC rival able to compete with the Chinese player on the global market.
2. Boost resilience and profitability of the combined business. At the time of the deal, Bombardier Transportation was drowning in debt and negative cash flow.
3. Strengthen presence on key regional markets, North America, UK, Scandinavia, etc.
4. Acquire a quality asset at a reasonable price.
Achievements
1. The merged entity took second place among global rolling stock manufacturers by revenue, pulling well clear of rivals (Siemens, Wabtec, etc) and closing the gap with CRRC in product range and turnkey project delivery (from financing to operation). Order book of 2005 exceeded $100 bln.
2. Financials improved over five years. In 2025, revenue hits approx. $18.7 bln (+20.5% vs 2021) and adjusted EBITDA margin approx. 6% (+1 pp vs 2021). Net debt has normalised, equity value is rising annually.
3. Alstom integrated Bombardier Transportation products and businesses. Traxx loco production added. Electro locomotive range expanded, with six-axle models to be built for Kazakhstan. HSR train platform is developed jointly. Monorail, signalling and infrastructure portfolio has broadened. Some sites are sold or shuttered. Service for legacy fleets from both firms is developed. Major contracts secured in target markets, Scandinavia, UK, Ireland, Mexico, India, etc.
4. Deal closed approx. $400 mln below top-end valuation, which is around two years’ Bombardier Transportation revenue. Cash paid: $4.4 bln, balance via options and debt obligations.
Verdict
The transaction can be deemed a success for both parties. Alstom tacitly acknowledged as much by promoting merger leads. Quebec’s pension fund (17.5% shareholder) can sit easy, pursuing patient infrastructure investments without risking Canadian pensions.
