Bombardier (TSE:BBD.B) has denied rumors that it will merge its railway unit with Germany’s multinational Siemens AG.
The Wall Street Journal, citing unnamed sources, published an article on Wednesday suggesting that the two multinationals have held discussions on the matter and that they had even reached a preliminary stage of negotiation.
But, said Isabelle Rondeau, a Bombardier spokeswoman flatly: "There are no talks with Siemens," speaking to Montreal’s ‘Les Affaires’, while Siemens simply refused to comment, even as it did not deny the talks outright.
The merger rumors, however, have given some lift to Bombardier’s shares, which have suffered a slump since the start of the year, losing over 54% ytd. By the early afternoon, BBD.B shares were trading five percent higher, trading in the C$1.90 zone on the TSX.
Bombardier, which is scheduled to will release its second quarter results on Thursday, has been preparing to spin off its ground transportation division, estimated to be worth US$5 billion, through an initial public offering (IPO) in Germany, which should take place in the fourth quarter in order to help finance some of the aerospace division programs including the much delayed C-Series airliner and the Global 7000/8000 business jets, for which orders have slumped.
While Bombardier has denied talks with Siemens, there is no question that it is possible if not probable. But, Bombardier can also look to Thales or Alstom or even beyond to Hitachi in Japan. The merger of Chinese transport giants CNR and CSR Corp in China in 2014 has inspired a merger frenzy in the sector.
Late last summer Bombardier pulled out of a bidding contest for Ansaldo-Breda, the rail transport unit of Italy’s industrial giant Finmeccanica.
Hitachi announced that it finalized a EUR809 million deal for the assets on March 31, bringing its potential sales to US$3.3 billion, rather close to the range of Bombardier or Siemens. Hitachi will use its new European assets to compete with Bombardier in Europe and also in India, which has an extensive rail network needing upgrades.
For the time being, however, there are no actual deals, just rumors and opportunities to consider.