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PARIS — French train maker Alstom’s board will meet on Wednesday evening to decide on a possible offer for the rail business of Canada’s Bombardier , a source familiar with the situation told Reuters.

French TV station BFM reported earlier on its website that Alstom is set to make a firm offer for the Bombardier division, valuing it at just under US$7 billion.

Alstom and Bombardier declined to comment.

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Quoting several sources close to the company, BFM said the two firms had been discussing a deal for months and that Alstom had recently made a non-binding offer valuing the business at US$7 billion. The new offer would be binding and would be worth less than the first one, BFM said.

BFM reported that Alstom would finalize its offer after Bombardier releases earnings on Thursday. It said that following Alstom’s first offer, considered attractive by Bombardier, the firm had opened its books to Alstom for due diligence. BFM quotes sources as saying that while the firm has a US$35 billion order book, many of its contracts are not very profitable.

BFM wrote that Alstom would offer cash for Bombardier’s 70 per cent stake of its railway business and Alstom shares for the 30 per cent held by Canada’s Caisse de dépôt et placement du Québec. It also said that Alstom was the only bidder for the railway business, after Siemens and Hitachi withdrew.

Reuters reported late last month that Bombardier had approached Alstom and Japan’s Hitachi to find a merger partner for its rail business as it struggles to contain costs.

© Thomson Reuters 2020