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Mitsubishi to buy Bombardier regional-jet unit for US$550m
[NEW YORK] Mitsubishi Heavy Industries agreed to buy Bombardier's regional-jet program for US$550 million, extending a push into commercial aircraft and setting up a rivalry with Embraer.
The Japanese manufacturer will acquire the maintenance, support, marketing and sales operations for the aging CRJ program through the cash deal, according to a statement by the companies Tuesday. Mitsubishi is also assuming liabilities of about US$200 million and taking over Bombardier's interest in a regional-jet securitisation program, which is valued at about US$180 million.
While Bombardier will wind down production of the CRJ line of short-haul jets over the next year and a half, the acquisition gives Mitsubishi an expanded global presence spanning engineering, development and support functions. That will bolster the company's ability to market its new SpaceJet regional aircraft, the first airliner built in Japan since the 1960s.
For Bombardier, the transaction essentially ends a three-decade presence in the commercial aircraft market as it narrows focus on making business jets and passenger trains. The Canadian company last year handed control of its C Series jetliner program to Airbus, which renamed the plane the A220.
The deal, expected to close in the first half of next year, "represents the completion of Bombardier's aerospace transformation," chief executive officer Alain Bellemare said in the statement.
Mitsubishi, which sees global demand for more than 5,000 regional jets over the next two decades, will face off with Embraer in the market for small aircraft. The Brazilian planemaker is in the process of combining its commercial-jet business into a joint venture with Boeing.
Mitsubishi has spent at least US$2 billion developing the SpaceJet, which has been plagued by delays and production snags. The company is moving closer to the debut of the aircraft line, formerly known as the MRJ.
Bombardier will keep control of a CRJ production facility in Mirabel, Quebec, and supply spare parts for the plane, which is expected to end production in the second half of 2020, the companies said. Bombardier will also retain liabilities representing part of credit and residual-value guarantees totaling approximately US$400 million.