PARIS, Feb 18 (Reuters) - Alstom shares fell on Tuesday after Alstom agreed to buy the rail division of Canada’s Bombardier for up to 6.2 billion euros ($6.7 billion), in a deal which could still face tough scrutiny from regulators and unions.
Alstom shares were down 2% in early session trading.
“We believe shares will now remain range bound amid the capital increase and uncertainty during a lengthy anti-trust process,” wrote analysts at JP Morgan, which cut its rating on Alstom to “neutral” from “overweight”.
The agreement between Alstom and Bombardier would unite companies with an estimated $17 billion in combined revenue.
A combination with Bombardier would give Alstom a share of between 40% and 60% of the European regional train market, according to estimates cited by union sources in France, well above Siemens at 10% to 20%.
But some analysts have said there could be less opposition to a deal this time as Alstom and Bombardier have a lower combined European market share in high-speed rail and signalling.
French trade unions issued a statement late on Monday to warn that the deal between Alstom and Bombardier must not result in major job losses in France.
Alstom boss Poupart-Lafarge himself said on Monday the acquisition would not affect jobs and that he was confident in achieving antitrust approval.
$1 = 0.9231 euros Reporting by Sudip Kar-Gupta; Editing by Dominique Vidalon