Bombardier Reportedly Scrambles to Craft Rail Merger with Alstom, Hitachi
January 24, 2020 at 05:10 pm
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Bombardier Inc. (TSX:BBD.B) has approached Alstom SA (ENXTPA:ALO) and Hitachi Ltd. (TSE:6501) to find a merger partner for its rail business as it struggles to contain costs that have eaten into margins, sources told Reuters. The company is working with Citigroup Inc. (NYSE:C) and UBS Group AG (SWX:UBSG) to strike a deal that could help create a rail champion to better compete with CRRC. It remains in active talks with Alstom, while also looking at Hitachi as another merger option, the sources said, requesting anonymity as the matter is confidential.
Bombardier, Alstom, Hitachi and Siemens all declined to comment. Discussions with Alstom began in July and became serious in September, one of the sources said.
Hitachi specializes in manufacturing and marketing of electronic and industrial equipments. Net sales (including intragroup) break down by family of products and services as follows:
- social infrastructure and industrial systems (24.7%): elevators, escalators, industrial facilities, railway systems, power generation units, etc. The group also provides engineering and construction of nuclear, hydroelectric, and thermal power plants services;
- information and telecommunications products and services (20.1%): systems integration, cloud computing, software, servers, hard disks, PCs, ATMs, data communication base stations, payment terminals, etc.;
- materials and components (16.6%): semi-conductor materials, printed circuit cards, cables, copper and forged steel products, magnetic materials, organic and inorganic chemical products, etc.;
- construction equipment (10%) : hydraulic excavators, wheel loaders, mining equipment, etc.;
- automotive systems (9.4%): powertrain systems, control systems, etc.;
- electronic products (9.2%): fiber-optic components, screen tubes, testing and measurement equipment, medical equipment, equipment for manufacturing semiconductors, etc.;
- household appliances (4.7%): heating and air conditioning equipments, refrigerators, washing machines, etc.;
- other (5.3%): mainly transport, financial and logistical services.
Net sales are distributed geographically as follows: Japan (49.2%), Asia (21.3%), North America (12.7%), Europe (10.8%) and other (6%).
HITACHI, LTD. 
