May 7, 2015 / 9:24 PM / in 3 years

Bombardier may eventually seek partnership for rail unit: CEO

MONTREAL (Reuters) - Bombardier Inc BBDb.TO may in the long run take on a partner or investor in the rail unit it is preparing to take public as it decides how best to respond to rail industry consolidation, its chief executive officer said on Thursday.

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

Chief Executive Alain Bellemare spoke after the Canadian train and plane manufacturer said it was preparing an initial public offering for a minority stake in its rail unit, Bombardier Transportation.

The company said repeatedly that the unit is not for sale, but noted that the offering preserves flexibility, should it “wish to participate in future rail equipment industry consolidation.”

“If you look at the train business long-term, how do you best position this business?” Bellemare told Reuters in an interview.

“Is standalone the best option? If we think that there are better options, what are these options and what should we do? In that context, we’re going to be looking at some type of partnership or investment in BT.”

Chinese train makers CNR Corp Ltd 601299.SS and CSR Corp Ltd 601766.S are in the midst of merging to create the world’s biggest railway equipment company, shaking up the structure of the market.

Reuters reported last week that CNR and CSR had been in discussions with Bombardier about possibly buying a controlling stake in the rail unit, once they complete their own merger.

Any Chinese attempt to purchase Bombardier’s rail unit would likely be scrutinized by the governments of Canada and the province of Quebec.

Asked whether a partial sale to a Chinese train maker, Germany’s Siemens SIEGn.DE or some other consortium would be politically feasible, Bellemare said it should be.

“It could be an antitrust issue, I give you that, but I don’t see why politics would have a say in us making a smart, strategic business decision,” he said.

Bellemare said he told Quebec Economy Minister Jacques Daoust last week that Bombardier Transportation was not for sale. He said the minister then pressed him for specifics on Bombardier’s plans, which Bellemare said he could not provide.

“I said no, I am not (going to say), because the day I start doing this I‘m done,” he said, noting that the question has already attracted extensive media coverage. “We need to reel this back in and do what is right for the business.”

Writing by Allison Martell; Editing by Jeffrey Hodgson and Matthew Lewis

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