Bombardier transportation and the Adtranz acquisition

Thèmes abordés

Bombardier transportation, Adtranz acquisition, Pierre Lortie, 2001, multinational company, railway equipment industry, Europe

Résumé du document

This case analysis is about the successful Adtranz acquisition by Bombardier in 2001 and how the new appointed president and COO Pierre Lortie was brought in to manage the acquisition.

Based in Montreal, Bombardier is a diversified multinational company with four major divisions : aerospace, recreational products, capital and transportation. Bombardier Transportation (BT), one of the two major divisions of Bombardier with aerospace, is the global leader in the rail equipment manufacturing and servicing industry. Indeed, BT produces a wide range of product including passenger rail vehicles, locomotives, bogies, propulsions and controls, in addition to services.

Extraits

[...] Moreover the Bombardier company culture is all about productivity and product quality. Employees have to focus on what has to be done and work in team while minimizing tensions. That is why adopting a functional departmentalization may cause difficulty for employees to appreciate what is important to the organization outside of their department. In addition, within a functional organization, coordination can become a difficult management challenge especially in a company growing in size and spreading to multiple geographical locations like Bombardier. [...]

[...] In other words, acting this way is considering the acquired firm as a partner within a strategic marriage. In this specific case Pierre Lortie should absolutely integrate Adranz within Bombardier Indeed, they could leave it as a stand-alone project, which would be independent from Bombarbier railway department and which would create revenue for the group. Nevertheless, Lortie should decide to integrate the firm directly to one's of Bombardier branches in order to mutualize the expertise from both firms. Adtranz has strong assets (see question below) which could bring additional value to Bombardier such as an outstanding technology in propulsion system. [...]

[...] This is a successful strategy because Bombardier has a successful internal business unit and Adtranz will provide additional resources. Concerning Lortie objectives within the three coming years in Europe, he should focus on growth. Indeed, acquiring Adtranz and proceed to the integration of the firm within Bombardier has various costs and will restructure the firm in itself. Such a move was made to acquire more growth and strengthen Bombardier position on the railway market. The main goal should be to succeed the acquisition, to allow the perfect transfer of technologies and assets which will then be a fantastic lever for growth Propose an organizational structure for the Railway SBU of Bombardier. [...]

[...] In addition, thanks to low margins, transportation is a great cash generator and allow Bombardier to invest in other sectors and the acquisition of Adtranz would also provide substantial upside potential to raise profits. The acquisition of Adtranz would necessarily strengthen Bombardier's global reach but also bring needed technology and product expertise. Lastly, Adtranz would add $ 2.7 billion in backlog to maintenance and services and provide at the same time more service facilities for customers in Europe What should Lortie do with Adranz? [...]

[...] Margins are lower in transportation than in aerospace, but transportation is a huge cash generator. This capital provided by transportation is reinvested in other sectors of the company. By acquiring Adtranz, Bombardier had succeeded in closing its technologic gap in propulsion system, high speed and inter-city cars. It was essential to establish a long-term position on the European market Is Adtranz an attractive acquisition target for Bombardier? What are the arguments for and against? Adtranz is an attractive acquisition target for Bombardier for several reasons. [...]