Bombardier announced on August 4 that it had signed a sale and purchase agreement to acquire Adtranz from its parent DaimlerChrysler. The move had been expected following Bombardier’s unsuccessful bid for Siemens’ rail arm. The deal values the extensive Adtranz empire at just US$725m, reflecting the company’s recent lack of profitability. Bombardier expects to recoup some of the cost through the sale of the Adtranz Fixed Installations (electrification) and Signalling divisions.
Bombardier President & CEO Robert Brown said that the acquisition would complement his company’s rail activities in terms of geographical markets, products and services. It will also give Bombardier Transportation, which has up to now been a vehicle builder, its own major source of electric traction packages and on-board train control systems. Brown added that acquiring the ’excellent management and personnel’ of Adtranz was a ’very attractive’ part of the deal.
DaimlerChrysler Chairman Jürgen Schrempp suggested that with the previously loss-making Adtranz ’on the threshold of profitability’, this was now an appropriate time to transfer the business to a company ’which values rail activities as one of its core businesses’. ’We feel Bombardier is the company best equipped to take Adtranz into the future’, he added.
Adtranz has 22000 employees, of which 3600 work in the Fixed Installations and Signalling businesses. Revenues for 1999 totalled US$3·4bn. Bombardier Transportation has a 16000-strong workforce with revenue for the financial year to January 31 2000 of US$2·3bn.
Four firms are understood to have expressed interest in buying the Adtranz Signal business: GE Harris and Harmon of the United States, plus the two European companies Alcatel and Invensys Rail (Westinghouse). With the recent acquisition by General Electric of Harmon Industries, which will be merged with GE Harris, the two American bidders are believed to have dropped out, leaving Alcatel and Invensys to proceed to due diligence.
However, commenting on the Bombardier/Adtranz announcement, the President of Alstom Transport Michel Moreau revealed in the French business press that his company was negotiating with Bombardier to acquire both the Adtranz Signalling and Fixed Installations activities. He welcomed the deal, which he saw as speeding up rationalisation of the European rolling stock industry.
For background information on the rapidly-changing supply industry, see our annual review by Andrew F Saxe: Is it time for someone to leave the field? (RG 8.00 p491). For market shares of the tram and light rail business, read the review by Harry Hondius (MR00 p17).
