ALSTOM SA: Acquisition of Bombardier Transportation: accelerating
Alstom’s strategic roadmap
Acquisition of Bombardier Transportation:
accelerating Alstom’s strategic
roadmap
- A step-change acquisition to address the ever-increasing demand
for sustainable mobility
- Excellent strategic rationale bringing to Alstom:
- Strong commercial and product complementarities
- Strengthened product lines and strategic industrial
capacity
- Leading portfolio offering and R&D capabilities
- Acquisition price from €5.8bn to €6.2bn
- CDPQ to become the largest shareholder of Alstom with c.18% of
the capital
17 February 2020 – Alstom
announces today that it has signed a Memorandum of Understanding
with Bombardier Inc. and Caisse de dépôt et placement du Québec
(“CDPQ”) in view of the acquisition of Bombardier Transportation.
Post-transaction, Alstom will have a backlog of around €75bn and
revenues around €15.5bn1. The price for the acquisition of 100% of
Bombardier Transportation shares will be €5.8bn to €6.2bn2 which
will be paid via a mix of cash and new Alstom shares. CDPQ will
reinvest c.€2bn corresponding to 100% of cash proceeds to be
received from the sale of its stake in Bombardier Transportation
and further invest €0.7bn3 in Alstom, outlining its strong belief
in the strategic rationale and value creation potential of the
combination.
“I’m very proud to announce the acquisition of
Bombardier Transportation, which is a unique opportunity to
strengthen our global position on the booming mobility market. This
acquisition will improve our global reach and our ability to
respond to the ever-increasing need for sustainable mobility.
Bombardier Transportation will bring to Alstom complementary
geographical presence and industrial footprint in growing markets,
as well as additional technological platforms. It will
significantly increase our innovation capabilities to lead smart
and green innovation. We will be thrilled to welcome all the talent
and energy of Bombardier Transportation employees. We are deeply
committed to step up the turnaround of Bombardier Transportation
activities and deliver significant value to all stakeholders,
particularly our customers. We will also further develop Bombardier
Transportation’s historical presence in Québec, drawing on Québec’s
well-established strengths in innovation and sustainable mobility.
We are pleased to welcome CDPQ as a new long-term shareholder. CDPQ
is fully supportive of the transaction and Alstom’s strategy.” said
Henri Poupart-Lafarge, Chairman and CEO of Alstom.
A step-change acquisition
Alstom and Bombardier operate in a very positive
market environment with passenger traffic expected to grow between
3% to 5% annually over the 2015-2025 period and global rail OEM
market expected to achieve a +3.0% CAGR between 2021-20234. The
dynamic is driven by urbanisation trend and a strong push for
decarbonation of mobility. In Europe, the European Commission has
set very ambitious targets in terms of CO2 reduction and several
countries have announced large investments in rail.
Alstom is a preeminent rail equipment player
with an industry-record backlog of €40bn and €8.1bn of annual sales
as of 31-Mar-2019. Over the period 2016-20195, Alstom delivered
strong sales development with an average annual growth of 5.5%
outperforming the market, and significantly improved profitability
(up to 7.5% adjusted EBIT margin).
Bombardier Transportation is a reference player
in global rail transportation with a €32bn backlog and €7.4bn sales
as of December 2019. With a track record of market leadership and a
strong expertise, Bombardier Transportation offers a broad product
portfolio across all market segments and has a well-balanced
industrial footprint between best-cost and high-tech countries.
Post-transaction, Alstom will benefit from
significant additional technologies and added R&D resources to
consolidate its innovation leadership in sustainable mobility.
The group will also further develop its presence
in Québec, Canada. After the transaction, Montréal will welcome the
Headquarters of Alstom of the Americas, leading all Alstom
operations and expansion in these geographies. In addition, drawing
on Québec’s well-established strengths in innovation and
sustainable mobility, Alstom will establish a centre of excellence
for design and engineering, as well as high-tech R&D
activities, which will notably be focused on developing sustainable
mobility solutions.
A unique opportunity to accelerate
Alstom’s strategic roadmap, Alstom in Motion
The acquisition of Bombardier Transportation is
a one-time opportunity coming at the right moment for Alstom,
having significantly strengthened its operational and financial
profile over the past 4 years to accelerate its strategic roadmap,
and adding to Alstom complementary commercial and industrial
platforms. Bombardier Transportation will notably bring to
Alstom:
- complementary geographical presence to broaden Alstom’s
commercial reach in key growing markets leveraging on Bombardier’s
successful historical track record in Germany, UK, North America
and its unique presence in China
- attractive rolling stock additions to Alstom’s portfolio
establishing a comprehensive offering across all rail segments to
better address customers’ needs for fit-for-purpose mobility
solutions, notably with selective niches such as Monorail, People
Mover and bringing strong expertise recognition through the
development of local specific solutions to blue-chip clients
- significant assets for Alstom services business with access to
the largest installed train fleet worldwide and a wide maintenance
facilities network in a high value segment and opening new
opportunities with a strengthened market coverage and service
offering
- complementary and strategic new geographies in signalling
enabling Alstom to accelerate the roll-out of its solutions
leveraging on new market access and highly qualified employees
consolidating Alstom capabilities in a strategic segment
- complete innovation portfolio and significant engineering and
R&D resources to lead smart and green mobility innovations
- best cost industrial footprint including in Eastern Europe,
Mexico and China and complementary footprint in mature markets e.g.
Germany & UK
A value-creating transaction for all
stakeholders
Alstom is committed to recover Bombardier
Transportation’s full operational and profitability potential with
the objective of restoring project execution and margin towards
standard level. This will be achieved thanks to clearly identified
levers including:
- focus on operation turnaround and backlog execution based on
Alstom best practices systematic roll-out
- structured action plan to ensure successful integration and
deployment of Alstom best practices and technologies globally
- Alstom’s financial discipline and successful track record in
profitability step-up
- the strong cultural fit and understanding of Bombardier
Transportation developed during numerous co-led projects
In addition, tangible and executable synergies
have been identified and Alstom plans to deliver €400m run rate
cost synergies in year 4 to 5.
As a result of greater efficiency and of a more
robust operational profile, the transaction is expected to be
double-digit EPS accretive from year 2 post closing6 for Alstom
shareholders.
Customers will also benefit from the extensive
expertise and the broad portfolio of this larger entity.
CDPQ becoming a new long-term
shareholder of Alstom
Pursuant to the terms of the acquisition, CDPQ
(currently holding 32.5% of Bombardier Transportation), will become
the largest shareholder of Alstom with approximately 18% of
capital7. CDPQ is a highly regarded strategic investor with a
long-term investment approach and has a significant and successful
track record in the rail industry. It is fully supportive of
the transaction and Alstom’s strategy. CDPQ will reinvest its
proceeds for c.€2.0bn and realize an additional investment of
€0.7bn in Alstom.
Bouygues will remain an important shareholder of
Alstom with around 10% of capital8. It is fully supportive of the
transaction and undertook to vote in favor of the
transaction-related resolutions at the EGM.
For existing Alstom shareholders, the
transaction is expected to deliver significant value and they will
be offered the possibility to accompany Alstom in the financing of
this strategic acquisition through a rights issue, subject to EGM
approval.
Indicative timetable and next
steps
The signing of the Memorandum of Understanding
has been unanimously approved by each of Alstom’s and Bombardier
Inc.’s board of directors and the envisaged transaction is fully
supported by CDPQ.
The Memorandum of Understanding organises the
information and consultation process by Alstom and Bombardier of
their respective Works Councils and contains exclusive commitments
by both parties.9
An extraordinary general meeting (EGM) voting on
the reserved capital increases and the rights issue should take
place no later than October 31, 2020. Bouygues undertook to vote in
favour of the transaction-related resolutions at this EGM.
Subject to the EGM, rights issue will take place
between H2 2020 and H1 2021 and the reserved capital increases will
take place at closing.
The transaction will also be subject to
clearance from relevant regulatory authorities and anti-trust
authorities. Closing is expected in the first half of 2021.
APPENDIX
Deal transaction terms
Structure of the
transaction
The transaction will take the form of an
acquisition, directly or indirectly, of 100% of Bombardier
Transportation’s share capital and voting rights, held by
Bombardier Inc. and CDPQ.
After equity raising transactions, CDPQ will
become the first shareholder of Alstom with c.18%10 of the capital
depending on financing and closing conditions and will be committed
to a 21-month lock-up undertaking from closing and a 22%
standstill11. It will appoint two board representatives and one
Observer (censeur). It will be proposed to the shareholders of
Alstom to remove double voting rights to adopt the one share-one
vote model.
Price structure
The price for the acquisition of 100% of
Bombardier Transportation shares will be €5.8bn to €6.2bn subject
to Bombardier Inc’s accounts and mechanisms at closing.In addition,
Bombardier Transportation net cash position at closing will be
retained by Alstom and a specific mechanism will lower purchase
price on a Euro-per-Euro basis, should Bombardier Transportation
have a negative net cash position as of 31 December 2020.
Fully committed financing – securing the
transaction while maintaining Alstom’s strong credit
profile
Alstom has a fully committed financing
structured with the objective of maintaining Alstom’s strong credit
profile and commitment to its Baa2 rating.
The acquisition of 100% of Bombardier
Transportation shares will be paid with a mix of cash and new
Alstom shares. The total equity component of the financing will
represent approximately €5bn, of which €2bn will be raised on the
market.
- €2.6- 2.8bn equity to be provided by CDPQ through a reserved
capital increase at closing, for a fixed subscription price of
44.45 euros per Alstom share. CDPQ is to reinvest 100% of the
transaction proceeds (€1.93-2.08bn)12 in Alstom and add new money
for €0.7bn.
- €0.5bn equity to be provided by Bombardier Inc. through a
reserved capital increase at closing, for a fixed subscription
price of 47.50 euros per Alstom share13
- €2.4bn bridge facility, fully underwritten by banks, to be
refinanced through
- an equity portion expected to represent up to €2bn to be raised
through a rights issue subject to market conditions
- new debt issuance of c.€0.4bn new debt
- the balance to be paid with Alstom existing cash on the balance
sheet including Bombardier Transportation net cash at closing.
Alstom will reinforce its liquidity profile
through a new €1.5bn Revolving Credit Facility replacing Alstom’s
and Bombardier Transportation’s existing revolving credit
facilities. The new facility will have a five-year tenor with two
one-year extension options.
Rothschild & Co and Société Générale are
acting as financial advisors to Alstom. Société Générale, Crédit
Agricole Corporate & Investment Bank and HSBC are acting as
underwriters in the bridge and revolving facilities, with Société
Générale also acting as Structuring and Coordinating bank. Cleary
Gottlieb Steen & Hamilton is acting as lead legal advisor to
Alstom.
Alstom will hold an analyst call on
Monday 17 February at 6:30pm CET
About Alstom |
|
|
Leading the way to greener and smarter mobility worldwide, Alstom
develops and markets integrated systems that provide the
sustainable foundations for the future of transportation. Alstom
offers a complete range of equipment and services, from high-speed
trains, metros, trams and e-buses to integrated systems, customised
services, infrastructure, signalling and digital mobility
solutions. Alstom recorded sales of €8.1 billion and booked orders
of €12.1 billion in the 2018/19 fiscal year.Headquartered in
France, Alstom is present in over 60 countries and employs 36,300
people. |
|
|
Contacts |
Press: Samuel MILLER - Tel.: +33 (1) 57 06 67
74Samuel.miller@alstomgroup.com Coralie COLLET - Tel.: +33 (1) 57
06 18 81coralie.collet@alstomgroup.com Investor
relations:Julie MOREL - Tel.: +33 (6) 67 61 88
58Julie.morel@alstomgroup.comClaire LEPELLETIER – Tel.: +33
(6) 76 64 33 06claire.lepelletier@alstomgroup.com |
|
Important information
This communication does not constitute or form
any part of an offer to exchange or purchase, or solicitation of an
offer to buy or exchange, any securities. Any such offer or
solicitation will be made only pursuant to an official offer
documentation approved by the appropriate regulators. Securities
may not be sold in the United States absent registration or an
exemption from registration under the U.S. Securities Act of 1933,
as amended. This communication is not a prospectus, product
disclosure statement or other offering documents for purposes of
Regulation (EU) 2017/1129 of the European Parliament and of the
Council of June 14th 2017.
This announcement includes forward-looking
statements, including but not limited to statements relating to
Alstom’s and Bombardier’s beliefs and expectations regarding the
acquisition of Bombardier Transportation by Alstom and expectations
regarding the proposed transaction, benefits that would be afforded
to customers, benefits that are expected to be obtained as a result
of the proposed transaction and the relevant parties’ ability to
enhance shareholder value through, among other things, the delivery
of cost savings and expected synergies. These statements are based
on certain assumptions and reflect Alstom’s and Bombardier’s
current expectations.
These forward-looking statements may be
identified by words such as “expect,” “look forward to,”
“anticipate,” “intend,” “plan,” “believe,” “seek,” “estimate,”
“will,” “project” or words of similar meaning. Alstom or Bombardier
may also make forward-looking statements in other reports, in
presentations, in materials delivered to shareholders and in press
releases. In addition, Alstom’s or Bombardier’s representatives may
from time to time make oral forward-looking statements. Such
statements are based on the current expectations and assumptions of
Alstom’s and Bombardier’s respective management teams, and depend
on numerous factors that are beyond Alstom’s or Bombardier’s
control. These forward-looking statements are subject to a number
of risks, uncertainties and factors, including but not limited to:
the failure of Alstom’s shareholders to approve the proposed
transaction; the effect of regulatory conditions, if any, imposed
by regulatory authorities; the reaction of Alstom’s and
Bombardier’s customers, employees and suppliers to the proposed
transaction; the ability to promptly and effectively integrate the
business of Bombardier Transportation within of Alstom; the
diversion of management time on transaction-related issues; and
those risks described in disclosures that have been made or may be
made with regulatory authorities such as the French Autorité des
marchés financiers (the “AMF”) and/or the Autorité des marchés
financiers (Québec). Should one or more of these risks or
uncertainties materialize, or should underlying expectations or
assumptions prove to be incorrect, the actual results, performance,
financial condition and prospects of Alstom or Bombardier may vary
materially from those expressed or implied in the relevant
forward-looking statements. Neither Alstom nor Bombardier intends,
nor assumes any obligation, to update or revise these
forward-looking statements in light of subsequent developments, new
information or circumstances that differ from those currently
anticipated. There can be no assurance that the proposed
transaction will be consummated or that the anticipated benefits
will be realised. The proposed transaction is subject to various
regulatory approvals and the fulfilment of certain conditions, and
there can be no assurance that any such approvals will be obtained
and/or such conditions will be met.
This document includes supplemental financial
measures that are not clearly defined under IFRS and that are or
may be non-GAAP financial measures. These supplemental financial
measures should not be viewed in isolation or as alternatives to
measures of Alstom and Bombardier Transportation net assets and
financial position or results of operations as presented in
accordance with IFRS in its Consolidated Financial Statements.
Other companies that report or describe similarly titled
supplemental financial measures may calculate them differently.
Due to rounding, numbers presented throughout
this and other documents may not add up precisely to the totals
provided and percentages may not precisely reflect the absolute
figures.
Additional information
In connection with the proposed transaction,
Alstom may file (i) with the AMF, a prospectus and other relevant
documents in connection with the proposed transaction and (ii) if
applicable, with the relevant regulatory authorities important
documents related to the proposed transaction. INVESTORS AND
SECURITY HOLDERS ARE URGED TO CAREFULLY READ ALL RELEVANT DOCUMENTS
FILED WITH THE AMF AND THE RELEVANT REGULATORY AUTHORITIES ,
INCLUDING THE PROSPECTUS WHEN IT BECOMES AVAILABLE, BECAUSE THEY
WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION.
Investors and security holders may obtain free of charge a copy of
the prospectus as well as other documents filed with the
authorities (when they are available) at the AMF’s website,
www.amf-france.org, and the relevant regulatory authorities’
websites. Those documents, when filed, may also be obtained free of
charge [from Alstom’s website at www.alstom.com or by contacting
Alstom’s Investor Relations team at
investor.relations@alstomgroup.com.
1 Based on Alstom results as of 31-march-19 and Bombardier
results as of 31-december 2019 2 Floor and cap subject
to closing mechanisms. Bombardier Transportation net cash position
at closing to be retained by Alstom. Protection mechanism
guaranteeing minimum zero net cash as at 31-Dec-2020 3 €2.6-
2.8bn equity to be provided by CDPQ through a reserved capital
increase at closing 4 UNIFE and SCI Verkher 5 Between FY
2015/16 and FY 2018/19 6 Post cost synergies and
implementation costs, and before PPA amortization 7 Post
equity raising transactions including rights issue 8 Post
equity raising transactions including rights issue.
9 A €75million break-fee is payable at the
termination of the Memorandum of Understanding by Alstom if it were
not to pursue the transaction 10 Indicative proforma
shareholding after all equity raising transactions, including a
€2bn rights issue 11 Or 2% above its shareholding at closing
if such shareholding exceeds 20% 12 based on final transaction
price to be determined at closing 13 Resulting in a c.3%
shareholding post equity raising, three months lock-up undertaking
from closing
- 20200217_PR_Acquisition_of_Bombardier_Transportation_EN
- Analyst Presentation - 2020 02 17
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