Bombardier Transportation & the Adtranz Acquisition Essay

Bombardier had evolved from its humble beginnings as a ride manufacturer based in Joseph-Arman an Bombardiers garage to a global condescension in which its once perfume recreational products were over shadowed, on a revenue basis at least, by its offerings in transportation, aerospace, and capital. In every section in which the company operated it was either follow 1 or 2 globally. This was non the case for the Transportation group (BT) in Europe, where in 2001 it sat in quaternate place behind Alstom, Siemens and Adtranz (AT). However, the AT acquisition presented the probability to vault BT to the head teacher of the industry. At a price bob of US$715 million (23% of ATs 2000 revenue) AT was a bargain and an opportunity worth considering for several reasonsRevenue harvesting Unlike all other Bombardier stemmaes, BTs revenue was counter-cyclical so growth in the sector would provide better ratio to its overall revenue (Figure C1 in addendum C).With the addition of AT, BTs annual rail-related revenue could grow to US$7.6 billion in 2001 (up from US$2.2 billion in 2000) with a backlog of US$14.5 billion. 1 enchantment BT was a low margin business it was a cash generator that helped to finance other Bombardier businesses.Geographic Expansion AT had a presence in a broader range of European markets and the region was viewed as the center of technological development. Asia and South the States utilized European engineering and practices so AT provided BT better gravel to rising markets.Completion of Product Portfolio BT lacked propulsion scheme and train controls competence. This had been mitigated by outsourcing to competitors and suppliers besides it was a competitive weakness as was exemplified by ATs excommunication from a key deal in the UK in 2000. AT excelled in these areas, and provided ready cost synergies and long term strategical strength. Naturally the acquisition was not without its downside. in that respect were many aspects of the deal that warranted consideration achievement SizeWhile BT had a successfully track record of acquisitions it had never merged a company of ATs size. Based on 2000 figures, AT had close 40% more employees, just under(a) 50%more in sales, and operated in 60 locales. The differing company structures were also of concern. pecuniary PerformanceAT posted nett losses going back 4 years in spite of restructurings. change surface at a bargain get price, an unsuccessful integration could threaten BTs income and cash flow.Due DiligenceAT was understandably reticent to let a competitor gain full access to its books should the deal not complete, so BTs diligence process was not broad. moreover BTs European management had not participated in the deal only amplifying the possible risks.Customer LossThe acquisition could foundation the loss of customers or new contracts. Additionally, AT had earned a reputation for poor production and servicing that competitors could exploit.A compre hensive plan would be required to draw the projected synergies, tackle the above renowned concerns, and should the deal clear anticipate and overlay regulator stipulations.