Alstom recently reached an early deal to acquire Bombardier’s train manufacturing arm for over $7 billion.

The proposed would cut Bombardier’s $9 billion in debt by half. The deal is conveniently timed as well given that Bombardier was having difficulty in coming up with the capital needed to pay off $1.5 billion of that debt, which is due in the upcoming year.

Details of the deal have not yet been finalized. Alstom is a French train company and Bombardier is Canadian. Alstom has confirmed that the deal is a possibility but has emphasized that the deal itself has not been finalized.

However, the deal is expected to consist mainly of cash and stock. Alstom has a history of trying to merge with other train manufacturers as it faces increasing competition CRRC, the world’s largest rail supplier, which is also owned by the Chinese state.

Bombardier has been selling different parts of its company over the past year. Most recently it has started talks to sell its business jet producing arm to Textron. However, that deal will most likely be stalled or canceled if the deal with Alstom goes through.

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Economics, Finance and Investing