June 5, 2019 / 3:16 PM / 4 months ago

BUZZ-Bombardier shares take off on talks to sell money-losing CRJ

** Shares of the Canadian plane-and-train maker rise 7.7% to C$2.11; top percentage gainer on the Toronto Stock Exchange’s S&P/TSX Composite index

** Bombardier confirms it is in talks with Japan’s Mitsubishi Heavy Industries Ltd to sell its money-losing regional jet program

** Bombardier eyeing potential sale of CRJ program to Mitsubishi is an opportunity to solidify the balance sheet and simplify its business - Desjardins analyst Benoit Poirier

** Poirier ests the potential sale could unlock $500 mln–$1 bln for Bombardier, while analysts at TD Securities differ saying the sale would not generate material proceeds

** The talks come amid a legal challenge between the two companies as Bombardier sued MHI’s unit last year, alleging former Bombardier employees passed on trade secrets to help Mitsubishi’s oft-delayed regional jet project

** Hence, William Blair & Co Nicholas Heymann called the talks “not new or surprising news”, as it likely suggests that after suing MHI for IP theft, the resolution may be for MHI to acquire the CRJ business

** Including Wednesday’s gains, stock up ~5% this year (Reporting by Shanti S Nair in Bengaluru)

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