Exclusive: Bombardier eyes 20-30 percent rail unit IPO in Frankfurt - sources

Fri May 8, 2015 3:33pm EDT
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By Arno Schuetze and Euan Rocha

FRANKFURT/TORONTO (Reuters) - Bombardier Inc (BBDb.TO: Quote) is aiming to sell a 20- to 30-percent stake in its rail unit via an initial public offering in Frankfurt as early as October, said three sources familiar with the matter on Friday.

The planes and trains maker unveiled broad plans to list a minority stake in Bombardier Transportation (BT) a day earlier but gave few details.

The sources, who asked not to be named as the plans are still private, said the listing in Germany, where the rail unit is headquartered, will allow the Canadian firm to put a firm valuation on the business ahead of a potential stake sale or joint venture.

Bombardier's Chief Executive Alain Bellemare told Reuters on Thursday that an IPO, when completed, will preserve Bombardier's flexibility to look at "some type of partnership, or investment in BT" down the road.

The industry is in the midst of consolidation, as big players team up to boost their ability to compete on major rail infrastructure projects across the globe.

China's top two trainmakers China CNR Corp Ltd 601299.SS and CSR Corp Ltd (601766.SS: Quote) are merging to create the world's biggest rail conglomerate in terms of sales. And in February, Hitachi Ltd (6501.T: Quote) agreed to acquire Italian aerospace and defense group Finmeccanica's SIFI.MI rail arm in a bid to strengthen its position in Europe.

"Taking advantage of hot markets and doing an IPO now clearly makes it easier for them to consider options in future," said a European source familiar with the matter. "Also a listed company has a clear market price in case a suitor comes along."

The source said Bombardier wants to be ready for a market debut in October but that the IPO is more likely to take place in December.   Continued...

Bombardier Inc.'s Pierre Beaudoin (R), executive chairman of the board, and Alain Bellemare, president and chief executive officer, and arrive for the company's annual general meeting in Montreal, May 7, 2015. REUTERS/Christinne Muschi