Signs that China may try to enter foreign rail markets by buying local established rail company vendors

From Bloomberg, Sep 9, 2015

Bombardier rejected an offer by Beijing Infrastructure Investment for 60 percent to 100 percent of Bombardier Transportation, Reuters reported earlier.

Reuters cited an Aug. 14 letter outlining the bid.

Louis Veronneau, vice president for mergers & acquisitions, rejected the proposal…

The approach was made by Beijing Infrastructure.

This type of acquisition would make Chinese sales into North American and European markets easier. But after an acquisition, much of the building content work could shift to China while still using the bought vendor brand name.

Montreal-based Bombardier is as an alternative planning an initial public offering of the rail unit during the fourth quarter of this year.

It is trying to reduce debt swelled by the development of the CSeries jet.

In July, Bombardier also denied a report that it was in merger discussions with Siemens AG over the unit.

Beijing Infrastructure’s reported offer gives Bombardier Transportation an enterprise value of $6 billion to $7 billion…    …a “reasonable valuation range” for the unit in an eventual IPO according to Canaccord Genuity analysts David Tyerman and Tao Ding says a Bloomberg report.

The Chinese meanwhile are exploring other opportunities to acquire North American rail companies.

To read the entire article, go to http://bloom.bg/1XKYSOA

Leave a Reply