Alstom takeover of Bombardier approved by EU regulators

The proposed takeover of train-maker Bombardier Transportation by French rival Alstom can go ahead after being approved by EU regulators, subject to conditions.

The decision by the European Commission means the deal, valued at more than six billion euros, can proceed.

Back in February, the parent company of Bombardier Transportation, which has its UK train-making factory in Derby, confirmed it had agreed to sell the business to Alstom.

At the time, Bombardier Inc signed a memorandum of understanding with the French firm to sell its rail business to reduce its huge debts and focus on the business jet market.

However, the deal was always subject to regulatory approval from the EU.

Bombardier’s Derby site is currently busy delivering major orders for a number of train operators
(Image: Carol Taylor)

If it had serious competition concerns, it could have called the deal in, which would have resulted in a four-month long investigation and the possibility of it being blocked.

But since the deal was first announced, Alstom has offered a number of concessions to allay antitrust fears, such as selling off some of its existing assets.

Importantly for the Derby operation, according to the European Commission, Alstom has committed to a “series of measures” aimed at preserving Bombardier’s joint bid with Hitachi for the £2.75 billion contract to build new high-speed trains for HS2.

The proposed HS2 train design from Hitachi and Bombardier
The proposed HS2 train design from Hitachi and Bombardier
(Image: Hitachi and Bombardier)

Now that the EU has decided not to intervene in the takeover, the combined Alstom/Bombardier business will create the world’s second largest train manufacturer, with the capacity to take on the top manufacturer, China’s CRRC Corp.

However, the European Commission said its approval was conditional “on full compliance with a commitments package offered by Alstom”.

Its executive vice-president Margrethe Vestager, in charge of competition policy, said: “Alstom and Bombardier are leading providers of state-of-the-art trains used every day by millions of passengers across the European Union.

“Thanks to the comprehensive remedies offered to solve the competition concerns in the areas of very high-speed, mainline trains and mainline signalling, the commission has been able to speedily review and approve this transaction.

“Going forward, a stronger combined Alstom and Bombardier entity will emerge.

“At the same time, thanks to these remedies, the new company will also continue to be challenged in its core markets to the benefit of European customers and consumers.”

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Headquartered in Berlin, Bombardier Transportation’s UK train-making factory is in Litchurch Lane, Derby.

The site is currently busy delivering several major orders to key customers, including West Midlands Trains, Greater Anglia and South Western Railway.

The Unite union, which represents many workers at Litchurch Lane, has previously said it has received assurances from senior executives at Bombardier about the future of the Derby train factory, which employs around 2,000 people.

Daniel Desjardins, chairman of Bombardier Transportation, said: “We are pleased that the European Commission has approved this transaction, based on a thorough review of the merits of the transaction and application of EU competition rules.

“I extend my personal appreciation to the European Commission’s team for their diligence and professionalism.

“Today’s decision marks a positive step for the growth opportunities of the European rail sector, which is a world leader thanks to strong domestic competition and commitment to the next generation of green and digital mobility solutions.”

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