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April 15, 2015

Bombardier reportedly seeking advice from UBS and Citigroup for rail unit sale

Train manufacturer Bombardier has reportedly hired global financial services firms UBS Group and Citigroup to offer assistance for a potential initial public offering or sale of its rail unit.

Train manufacturer Bombardier has reportedly hired global financial services firms UBS Group and Citigroup to offer assistance for a potential initial public offering or sale of its rail unit.

Bloomberg reported citing people familiar with the matter that the potential transaction could be valued at approximately $5bn.

Reuters previously reported that the Canadian rail and aeroplane manufacturer is exploring a possible sale of all or part of its railway business, to pay for huge cost overruns in its aircraft business.

"A sale had been ruled out but the company has taken note of the global consolidation trend in the industry."

A merger with Siemens or Alstom could also be considered, the news agency reported last week citing sources familiar with the matter.

However, according to Quebec economy minister Jacques Daoust, Bombardier chairman Pierre Beaudoin had assured ‘a sale had been ruled out but the company has taken note of the global consolidation trend in the industry.’

Daoust sid: "I have no reason to doubt Pierre Beaudoin when he says there will be no sale."

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The rail unit of Bombardier, which offers rail vehicles, and signalling and control equipment, posted earnings before interest and taxes of $429m last year.

However, Bombardier spokeswoman Isabelle Rondeau declined to comment on the report, saying the company wouldn’t speculate on rumours.

In February, Hitachi agreed to acquire Finmeccanica’s rail transport engineering company, AnsaldoBreda, and its 40% stake in signalling supplier Ansaldo STS.

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