Business

Alstom expresses concern over finances at Bombardier's rail unit, but takeover will likely go through

French rail giant Alstom SA is warning that problems at Bombardier's train division may affect negotiations to buy it, but says it still plans to go ahead with the takeover deal.

European transportation giant is supposed to buy Bombardier's rail division for more than $8 billion

Alstom says that "negative developments" around Bombardier's rail operations have prompted the would-be buyer to "take into account the consequences" during upcoming discussions over the planned $8.2B purchase of the unit. (Darryl Dyck/Canadian Press)

French rail giant Alstom SA is warning that problems at Bombardier's train division may affect negotiations to buy it, but says it still plans to go ahead with the takeover deal.

Alstom says that "negative developments" around the train unit's operations and finances revealed in Bombardier's quarterly earnings report last week have prompted the would-be buyer to "take into account the consequences" during upcoming discussions.

On Thursday, Bombardier reported an additional charge of $435 million US at its rail business, largely related to costs at late-stage projects in the U.K. and Germany.

Late last month the European Commission gave the green light to Alstom's US$8.2-billion purchase of the Bombardier train unit following an investigation that found the transaction raised serious competition issues, prompting "significantly improved" commitments from Alstom, according to European competition authorities.

A Bombardier spokesperson says it is complying with all the conditions of the deal and that it will continue to work toward signing the final agreement as soon as possible.

The sale, which would help ease Bombardier's US$9.3-billion debt, was initially slated to close in the first half of 2021.

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