July 8, 2020 / 4:21 PM / a month ago

RPT-EXCLUSIVE-Alstom to offer sale of French rail factory to win Bombardier unit buy -sources

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July 8 (Reuters) - France’s Alstom SA will propose concessions to European regulators on Thursday, including the sale of a French rail factory, in an effort to win early antitrust approval for its planned purchase of Bombardier Inc’s transportation unit, three sources familiar with the matter said on Wednesday.

Alstom’s bid of up to 6.2 billion euros ($7.0 billion) for Bombardier’s unit was launched in February and the EU competition enforcer is likely to demand concessions to approve the deal.

Alstom unions are being summoned to an online meeting on Thursday where management will provide an update on discussions with the European Commission, two sources said.

Alstom is seeking to create the world’s No. 2 train manufacturer with the Bombardier unit purchase to better compete with Chinese leader CRRC Corp in its second attempt at a deal, after the European Commission blocked its planned merger with Siemens AG last year.

To secure regulatory approval, Alstom plans to offer a list of concessions, including asset sales in on-board signaling, high-speed trains and regional mainline trains.

Thursday is the deadline for concessions during the EU’s preliminary review of the deal, with a decision due by July 16. Alstom expects to close the deal with Bombardier in the first half of 2021.

One plant on Alstom’s list is the Reichshoffen factory in Eastern France which has around 800 employees and produces mostly regional trains, although the final package may change, one of the sources said.

Sources declined to be identified as the discussions are confidential.

French unions are still hoping to keep the Reichshoffen site, a fourth source said.

Berlin-based Bombardier Transportation employs around 36,000 people and operates in 60 countries, building trains and providing services like signaling and maintenance to clients.

In Germany, Bombardier would not agree to offer a complete factory but is willing to give up one product to satisfy regulators, two sources said.

Alstom CEO Henri Poupart-Lafarge told shareholders on Wednesday in Paris the discussions with the European Commission are going “smoothly.”

Alstom declined to comment further. Bombardier referred questions about the deal terms to Alstom. ($1 = 0.8861 euro) (Reporting by Foo Yun Chee in Brussels, Alexander Huebner in Munich, Allison Lampert in Montreal and Gwenaelle Barzic in Paris Editing by Denny Thomas and Matthew Lewis)

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