Chinese firms looking to buy stake in Bombardier rail unit, reports say

Multiple published media reports suggest that two Chinese rail companies in the process of merging with each other have an interest in acquiring some sort of stake in Bombardier's rail division.

Bloomberg and Reuters both reported Thursday, citing unnamed sources close to the companies involved, that Chinese rail companies China CNR Corporation and CSR Corporation Ltd. have tentative interest in acquiring some sort of interest in Bombardier's train-making division.

CBC News has not been able to independently verify those reports. In February, Bombardier said it was examining all parts of its business and "will explore other initiatives such as certain business activities' potential participation in industry consolidation in order to reduce debt."

But earlier this month, Quebec's economy minister said the company had assured him that the rail division was "not for sale" as part of that plan.

The two Chinese companies are in the midst of merging with each other, to create the world's largest train company in a deal worth more than $26 billion. Both news organizations claim that any deal with Bombardier would not happen until that merger has been finalized.

The Bombardier rail unit as a whole could fetch as much as $5 billion, analysts in the investment community have speculated.

Any deal would face regulatory approval by the governments of China, Germany (where the unit is based), Canada and Quebec. Canada and Quebec are likely to have concerns over any sort of foreign control over a heavily subsidized iconic Canadian company.

At least one analyst speculated on Thursday that some sort of tie-up makes sense for both sides on paper — depending on the money involved.

"Although none of the three companies could confirm the news and such an acquisition would attract immense regulatory scrutiny, we find the idea very interesting," Nomura analyst Patrick Xu said in a note to clients. 

"Such an acquisition could create significant synergy by combining Bombardier's technologies and access to Western markets with CSR's/CNR's production capability."