Bombardier solidifies US$480M contract
Company braces for IPO later this year
Bombardier Inc. has signed a US$480-million deal to provide trams to the Vienna transport authority, adding to the division’s backlog as it prepares for an initial public offering later this year.
The contract for 119 Flexity trams, which will be manufactured in Vienna, includes a 24-year maintenance agreement and options for an additional 37 vehicles.
“Our employees at the Vienna site are particularly proud that Bombardier trams will operate in their hometown,” said Carsten Bopp, head of light-rail vehicles at Bombardier Transportation Austria, in a statement.
Bombardier has sold more than 1,300 Flexity trams to date. The trainmaking business — which builds subways, high-speed trains and other rail equipment and accounts for about half of the company’s revenue — had a total backlog of US$32.5 billion at the end of 2014.
The company is planning to spin off the unit in the fourth quarter of this year, saying an IPO will “crystallize” its value, strengthen Bombardier’s overall financial position and preserve flexibility to participate in industry consolidation.
Bombardier has not yet said how much of a stake it wants to sell or how much money it plans to raise in the offering. RBC analyst Walter Spracklin has estimated the entire division is worth at least US$3.5 billion.
Bombardier also said Thursday that it has hired a TD Securities investment banker to oversee the IPO and any other sales or acquisitions.
Louis Véronneau will take the title of vice-president of mergers and acquisitions. He will start immediately and report to chief executive Alain Bellemare.
“This hire particularly does not suggest anything new,” Macquarie Securities analyst Konark Gupta said. “I think they have always considered all their options. They have only publicly disclosed the BT IPO, but I’m sure they are looking at the entire portfolio.”
In February, Bombardier announced that Steven Ridolfi, its senior vice-president for strategy and mergers and acquisitions, would retire after 32 years with the company.
The company said Véronneau wil l oversee part-nerships, joint ventures, mergers, acquisitions and divestitures, as well as the IPO, which it announced last month.