A merger between France’s Alstom – an employee seen here on Oct. 4, 2019 – and Bombardier Transportation will face intense regulatory scrutiny in Brussels.
PATRICK HERTZOG/AFP/Getty Images
Bombardier Inc. is on the verge of a transformational deal to unload its train business to France’s Alstom SA as it looks to a vastly different future exclusively as a maker of private luxury jets.
The companies and their advisers are working through the last steps on an agreement that would see Alstom take over Bombardier Transportation (BT), according to two sources familiar with the situation. The total deal value is in the range of US$7.5-billion including debt, one of the sources said.
An announcement could come as early as Monday, although it could take longer to finalize the deal, the sources said.
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Such an accord would dramatically change the face of Bombardier, setting one of Canada’s most illustrious but troubled industrial manufacturers on a new path focusing solely on private business aircraft. It would also give it a financial reset by allowing it to pay down a major chunk of its US$9-billion debt, which has been a stranglehold on the company and raised repeated doubts about its long-term viability.
Bombardier’s trains unit has historically acted as a generally dependable revenue generator to offset its more cyclical aviation business. More recently, however, BT has encountered major problems delivering on several big contracts, and it is either making no money or losing money on some of them, the company confirmed last week in its fourth-quarter earnings report.
Canadian pension fund Caisse de dépôt et placement du Québec holds a 32.5-per-cent stake in Berlin-based BT and has been encouraging Bombardier for years to explore its options for the train unit, insisting that the business would be strengthened by combining its operations with another manufacturer. Bombardier made a proposal to merge BT with Germany’s Siemens AG in the fall of 2017, but was rebuffed.
Former Caisse chief executive Michael Sabia, who left the job for the University of Toronto earlier this month after a decade-long tenure, was instrumental in brokering the agreement between Bombardier and Alstom, one source told The Globe. The deal was dead and Mr. Sabia saved it, the source said.
The Globe is not identifying the two sources by name because they were not authorized to speak to the media about the transaction.
Bombardier and Alstom both declined to comment. A Caisse spokesman said the pension fund doesn’t comment on rumours.
Alstom will pay Bombardier in cash while the Caisse is agreeing to take shares in Alstom as payment, France’s BFM Business channel reported. That would make the Canadian pension fund Alstom’s biggest shareholder with an estimated stake as large as 20 per cent, the station said.
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The Wall Street Journal reported Sunday afternoon that a preliminary deal had been reached. Reuters said an agreement was close but not yet signed.
A merger between France’s Alstom and BT will face intense regulatory scrutiny in Brussels, where European Union competition czar Margrethe Vestager is both feared and respected for her tough anti-trust position. A year ago, she blocked the planned merger between the train businesses of Alstom and Siemens.
Unlike an Alstom-Siemens tie-up, however, a combined Alstom-Bombardier contains less overlap on high-speed trains and signalling equipment. That raises the odds for regulatory approval, analysts at investment bank Berenberg have said. The two companies also have the advantage of working from the rejected Alstom-Siemens merger to draft their own plans.
Bombardier Transportation is one of the world’s biggest makers of trains and rail equipment, with products that include subway systems, trams, automated people movers and intercity trains. Revenues for the business last year totalled US$8.3-billion and it enjoys a backlog of current orders worth US$35.8-billion.
Some 36,000 people worked for BT as of December, including 4,600 in Canada, according to the Bombardier website. The company’s main Canadian manufacturing sites are located in Thunder Bay and La Pocatière, Que.
Bombardier’s train business has gone through major upheaval in recent years, with several changes of senior leadership. The unit is now led by Danny Di Perna, who has been trying to close out several problematic contracts while boosting profit margins by offering clients more solutions based on the company’s existing technology.
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BT’s products include Zefiro trains, which are among the fastest in the world. The company also designed and engineered the high-speed Frecciarossa (Red Arrow) trains used in Italy. Alstom also builds high-speed trains and has a significant signalling business.
Under a five-year turnaround effort led by chief executive Alain Bellemare, Bombardier has been selling assets in a bid to focus on the most promising and profitable parts of its business. Today, it is a shadow of its former self, having unloaded its turboprop-plane business, its aviation-training business and its waterbomber business, among other pieces.
Last week, Bombardier completely exited commercial aviation with the announcement that it pulled out of the A220 airliner joint venture with Airbus SE. The plane is the former C Series airliner developed by Bombardier at a cost of more than US$6-billion. It was the company’s biggest research and development effort in its history, a nearly two-decades-long push funded in part by public money with the aim to put Bombardier at the cutting edge of global passenger-jet manufacturing.
TOKYO (AP) — Japanese technology group SoftBank swung back to profitability in the July-September quarter, boosted by positive results in its Vision Fund investments.
Tokyo-based SoftBank Group Corp. reported Tuesday a fiscal second quarter profit of nearly 1.18 trillion yen ($7.7 billion), compared with a 931 billion yen loss in the year-earlier period.
Quarterly sales edged up about 6% to nearly 1.77 trillion yen ($11.5 billion).
SoftBank credited income from royalties and licensing related to its holdings in Arm, a computer chip-designing company, whose business spans smartphones, data centers, networking equipment, automotive, consumer electronic devices, and AI applications.
The results were also helped by the absence of losses related to SoftBank’s investment in office-space sharing venture WeWork, which hit the previous fiscal year.
WeWork, which filed for Chapter 11 bankruptcy protection in 2023, emerged from Chapter 11 in June.
SoftBank has benefitted in recent months from rising share prices in some investment, such as U.S.-based e-commerce company Coupang, Chinese mobility provider DiDi Global and Bytedance, the Chinese developer of TikTok.
SoftBank’s financial results tend to swing wildly, partly because of its sprawling investment portfolio that includes search engine Yahoo, Chinese retailer Alibaba, and artificial intelligence company Nvidia.
SoftBank makes investments in a variety of companies that it groups together in a series of Vision Funds.
The company’s founder, Masayoshi Son, is a pioneer in technology investment in Japan. SoftBank Group does not give earnings forecasts.
Shopify Inc. executives brushed off concerns that incoming U.S. President Donald Trump will be a major detriment to many of the company’s merchants.
“There’s nothing in what we’ve heard from Trump, nor would there have been anything from (Democratic candidate) Kamala (Harris), which we think impacts the overall state of new business formation and entrepreneurship,” Shopify’s chief financial officer Jeff Hoffmeister told analysts on a call Tuesday.
“We still feel really good about all the merchants out there, all the entrepreneurs that want to start new businesses and that’s obviously not going to change with the administration.”
Hoffmeister’s comments come a week after Trump, a Republican businessman, trounced Harris in an election that will soon return him to the Oval Office.
On the campaign trail, he threatened to impose tariffs of 60 per cent on imports from China and roughly 10 per cent to 20 per cent on goods from all other countries.
If the president-elect makes good on the promise, many worry the cost of operating will soar for companies, including customers of Shopify, which sells e-commerce software to small businesses but also brands as big as Kylie Cosmetics and Victoria’s Secret.
These merchants may feel they have no choice but to pass on the increases to customers, perhaps sparking more inflation.
If Trump’s tariffs do come to fruition, Shopify’s president Harley Finkelstein pointed out China is “not a huge area” for Shopify.
However, “we can’t anticipate what every presidential administration is going to do,” he cautioned.
He likened the uncertainty facing the business community to the COVID-19 pandemic where Shopify had to help companies migrate online.
“Our job is no matter what comes the way of our merchants, we provide them with tools and service and support for them to navigate it really well,” he said.
Finkelstein was questioned about the forthcoming U.S. leadership change on a call meant to delve into Shopify’s latest earnings, which sent shares soaring 27 per cent to $158.63 shortly after Tuesday’s market open.
The Ottawa-based company, which keeps its books in U.S. dollars, reported US$828 million in net income for its third quarter, up from US$718 million in the same quarter last year, as its revenue rose 26 per cent.
Revenue for the period ended Sept. 30 totalled US$2.16 billion, up from US$1.71 billion a year earlier.
Subscription solutions revenue reached US$610 million, up from US$486 million in the same quarter last year.
Merchant solutions revenue amounted to US$1.55 billion, up from US$1.23 billion.
Shopify’s net income excluding the impact of equity investments totalled US$344 million for the quarter, up from US$173 million in the same quarter last year.
Daniel Chan, a TD Cowen analyst, said the results show Shopify has a leadership position in the e-commerce world and “a continued ability to gain market share.”
In its outlook for its fourth quarter of 2024, the company said it expects revenue to grow at a mid-to-high-twenties percentage rate on a year-over-year basis.
“Q4 guidance suggests Shopify will finish the year strong, with better-than-expected revenue growth and operating margin,” Chan pointed out in a note to investors.
This report by The Canadian Press was first published Nov. 12, 2024.
TORONTO – RioCan Real Estate Investment Trust says it has cut almost 10 per cent of its staff as it deals with a slowdown in the condo market and overall pushes for greater efficiency.
The company says the cuts, which amount to around 60 employees based on its last annual filing, will mean about $9 million in restructuring charges and should translate to about $8 million in annualized cash savings.
The job cuts come as RioCan and others scale back condo development plans as the market softens, but chief executive Jonathan Gitlin says the reductions were from a companywide efficiency effort.
RioCan says it doesn’t plan to start any new construction of mixed-use properties this year and well into 2025 as it adjusts to the shifting market demand.
The company reported a net income of $96.9 million in the third quarter, up from a loss of $73.5 million last year, as it saw a $159 million boost from a favourable change in the fair value of investment properties.
RioCan reported what it says is a record-breaking 97.8 per cent occupancy rate in the quarter including retail committed occupancy of 98.6 per cent.
This report by The Canadian Press was first published Nov. 12, 2024.
