MONTREAL — Bombardier Inc. (TSX:BBD.B) is taking another run at buying an equity stake in a Russian railway company with its offer to purchase a part of United Electrical Engineering Plants.
Nearly two years after it ended talks with locomotive manufacturer Transmashholding, the Montreal-based plane and train maker is now looking to buy a stake in the Russian signalling equipment producer.
Spokesman Marc-Andre Lefebvre confirmed Tuesday that Bombardier submitted an “expression of interest” in mid-March, but he declined to provide details of the offer or how it would help Bombardier’s efforts to expand in the Russian railway market.
“We remain really positive about the fact that the Russian market can offer good marketing opportunities where our products and technologies can really be used to get into certain needs for the Russian market,” he said.
Lefebvre didn’t know when Russian Railways will approve the offer for its subsidiary.
J.P. Morgan analyst Joe Nadol said Bombardier joins Siemens in seeking to buy equity stakes in the Russian company.
In September 2008, Bombardier — the world’s largest railway manufacturer — ended talks with Transmashholding apparently over a disagreement about price.
Russia is a huge opportunity for Bombardier, with a potential annual demand of about 1,000 locomotives, including 300 electric locomotives.
Analysts viewed Bombardier as the preferred partner for Transmashholding, Russia’s largest locomotive and railway equipment manufacturer, because it already had three joint ventures in Russia.
Bombardier reports its first-quarter results and holds its annual meeting on Wednesday.
Analysts expect that the Berlin-based transportation division will continue to drive overall corporate profits until the aerospace division recovers.
The railway business is benefiting from government spending around the world, especially in Europe and Asia.
“A strong growing backlog in the transportation business positions Bombardier well to increase earnings and free cash flows, which should allow it to hold the line on its balance sheet and bridge the gap until aerospace recovers,” Dave Newman of National Bank Financial wrote in a recent report.
Bombardier Transportation has won several orders, including a $378 million option for 186 additional subway cars for Toronto’s subway system.
It is also in the bidding for several projects in Britain, Montreal, Australia, New Jersey, Italy and to develop the U.S. high-speed rail network.
Bombardier’s shares closed at $4.61, down nearly five per cent or 24 cents in Tuesday trading.