German industrial conglomerate Siemens AG has held talks to combine its rail unit with Canada-based Bombardier Inc.’s train business, people familiar with the matter said.
In past weeks, talks between two of the world’s largest train makers were at an early stage and a deal was far from guaranteed, the people said. Bombardier has also talked to other possible partners, two of these people said.
A Bombardier official in Canada denied that his company is in formal talks now with Siemens, and declined to discuss any possible past discussions. Bombardier continues to pursue its previously disclosed plan to sell part of its train-manufacturing business in an initial public offering on the Frankfurt Stock Exchange this fall and “evaluate other strategic opportunities,” said John Paul Macdonald, senior vice president for human resources and public affairs for Bombardier. “We are looking at industry consolidation, but there are no formal discussions” with Siemens, he said.
A Siemens spokesman declined to comment on possible talks with Bombardier.
“There is little specificity around Bombardier’s plans to float the minority stake in its rail business in Germany later this year, but there are two issues at play. One is cash [and the] other is consolidation, since the creation of a Chinese powerhouse through the merger of CSR Corp. and China CNR makes the landscape more challenging and elevates the importance of scale,” J.P. Morgan analysts said in a recent note. The analysts put a price tag of $5.1 billion on Bombardier’s train unit.
Source and Full Article : WSJ