China trainmakers seek control of Bombardier's rail unit: sources

Wed Apr 29, 2015 1:17pm EDT
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By Benjamin Kang Lim and Matthew Miller

BEIJING(Reuters) - China's top two trainmakers have been in discussions with Bombardier Inc (BBDb.TO: Quote) about possibly buying a controlling stake in the Canadian company's railway unit, two sources with direct knowledge of the matter said.

China CNR Corp Ltd 601299.SS and state-owned CSR Corp Ltd (601766.SS: Quote), now in the process of merging to create the world's biggest railway company, are exploring a stake purchase of the Bombardier unit, complementing China's plan to sell its high-speed rail technology abroad, the sources said.

   But discussions cannot move forward until after the Chinese trainmakers complete a planned $26-billion merger next month, said a person close to one of the Chinese companies.

Canada's Bombardier has been exploring a possible sale of all or part of its railway business as it seeks to pay for the huge cost overruns in its aircraft business, Reuters reported this month.

The Canadian company is working with banks on strategic options, that also include a possible initial public offering either in Germany, where the business is based, or in Britain. Bankers value a possible deal at up to $5 billion.

"I have no knowledge of this matter," said Xu Houguang, a CSR executive. Zhang Yong, an executive at CNR, also said he had no knowledge of this matter.

Bombardier spokeswoman Isabelle Rondeau declined to comment: "We will not comment on any speculation."

In February, Bombardier said it "will explore other initiatives such as certain business activities' potential participation in industry consolidation".   Continued...

Employees and guests tour a Bombardier LRV train at the manufacturing facilities in Toronto,Canada, in this May 29, 2012 file picture. REUTERS/Mike Cassese/Files