Canadian rail and aerospace engineer Bombardier is reported to be in talks with French train maker Alstom SA, according to a report in the Bloomberg news agency.

Bloomberg quotes unnamed sources as saying the two companies have held exploratory talks in the past few months.

Both companies have experienced some recent turmoil. Bombardier’s shares fell 37% last week after it warned of lower 2019 profits and said it might have to write down the value of its partnership with Airbus, with which it makes A220 jets.

Alstom sold off its turbine and electrical equipment businesses in 2014 and became a pure rail supplier. Last year a bid to merge with Siemens Mobility was called off after the European Commission ruled it out on competition grounds.

In 2017, Bombardier also held talks with Siemens, before deciding to pursue the deal with Alstom, instead.

Any merger between Alstom and Bombardier would also face scrutiny from regulators, according to Bloomberg’s sources.

The rationale for the deal would be similar to that for the Siemens plan – a need to compete with China’s CRRC, which dominates the global market for rolling stock.

Last year, French finance minister Bruno Le Mayor called the decision to halt the merger an “economic error” that “would serve the interests of China”. He pointed out that CRRC makes 200 high-speed trains each year whereas Siemens and Alstom together produce 35.

Image: Bombardier and Alstom collaborated to build France’s TGV trainsets (SeeSchloss/CC BY-SA 2.5)

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