French transport giant Alstom has announced that it will buy Canadian firm Bombardier’s rail business for $350m (£270m) less than previously indicated.
The two companies signed a sale and purchase agreement today worth $8.4bn, with total proceeds from the deal expected to come in at $6.2bn.
Back in August, Bombardier announced unexpected financial and performance issues at its transportation unit as it posted a $319m quarterly loss.
The surprise loss prompted the French firm to hint that it might seek to renegotiate better terms from the deal than had initially been agreed when a memorandum of understanding was reached in February.
The acquisition, which was given the green light by the EU’s competition watchdog in July, will make the world’s second largest rail firm.
After it adds the Canadian firm’s Berlin-based operations, Alstom will be behind only China’s CRRC Corporation in terms of size.
Henri Poupart-Lafarge, chairman and chief exec of Alstom, said: “The acquisition of Bombardier Transportation represents a transformational change for Alstom.
“It will enable the group to accelerate on its strategic roadmap and strengthen its leadership in the context of a dynamic market, at a time where sustainable transportation is at the heart of the global agenda.”
Bombardier said it expected net proceeds of $4bn from the sale once it has deducted investment house La Caisse’s $2.2bn stake.
Read more: Alstom confirms Bombardier merger talks
Chief executive Eric Martel said: “Today’s announcement marks a significant milestone towards achieving our near-term priorities and repositioning Bombardier as a pure-play business jet company.
“The proceeds from this transaction will allow us to begin reshaping our capital structure and start addressing our balance sheet through debt paydown, so that we can achieve the full potential of our incredibly talented employees and our industry leading business jet portfolio.”