Bombardier Inc. said it reached a definitive deal to sell its rail unit to French train maker Alstom SA, but at a lower price than the two sides agreed upon in February when they signed a memorandum of understanding.
The new deal gives the division an enterprise value of $8.4 billion, down $350 million, Bombardier said in a statement. The Montreal-based company said it will receive net proceeds of about $4 billion, as much as $500 million less than it expected seven months ago. The Caisse de depot et placement du Quebec, a minority investor in the business, is also selling its stake to Alstom.
The new price reflects the unit’s “current operational performance and market conditions,” according to a statement by Bombardier. Alstom had previously hinted it might seek better terms after the Canadian firm reported a second-quarter loss on write downs at the unit.
Bombardier is counting on the sale to reduce its debt load. Concern over a potential default has sent its shares plummeting 77% this year. They were up 9.3% Wednesday as 10:47 a.m. Toronto time.
The deal won preliminary approval from the European Union in July.
