Bombardier in Talks with Siemens to Combine Train Operations

In 2015 and 2016, when Bombardier Inc. (TSX:BBD.B) was really struggling, the company was actively pursuing some innovative ways to raise capital. It looked at selling its troubled CSeries regional jet division, but most of the chatter involved the far more stable transportation division.

According to reports, the transportation division is again in talks with a deal, this time with German-based Siemens AG.

The proposed joint venture – which could be worth more than $14 billion -- would merge the two companies train-making and signaling activities, according to reports obtained by Bloomberg.

Talks have been reportedly going on for weeks now, and while nothing is set in stone, the two companies are said to be getting close to reaching an agreement. A deal could be announced as early as a few weeks from now, but may face resistance from both regulators and unions.

Both companies are worried about aggressive Chinese competitors, which continue to expand internationally. The two firms believe getting bigger will help them increase market share.

Bombardier only owns 70% of its transportation business. It sold the other 30% stake to Caisse de Depot et Placement du Quebec last year in exchange for a $1.5-billion U.S. cash injection. It’s likely the Caisse de Depot ownership stake won’t be a hindrance when pursing this merger.

Bombardier shareholders welcomed this news. Shares of the transportation company shot up $0.09 each to $2.31, an increase of more than 4%. The company has recovered nicely since shares hit a low of $0.80 back in February 2016.