Mitsubishi Heavy Industries and Bombardier have entered into a definitive agreement under which MHI will acquire the CRJ regional jet program for $550 million in cash and assume liabilities amounting to some $200 million. Under the deal, MHI will acquire the maintenance, support, refurbishment, marketing, and sales activities for the CRJ Series, including the related services and support network located in Montréal and Toronto, its service centers located in Bridgeport, West Virginia, and Tucson, Arizona, as well as the type certificates.
The deal signals the impending end of CRJ production, control over which Bombardier will maintain until the backlog evaporates in the second half of 2020. The CRJ production facility in Mirabel, Québec, will remain with Bombardier and the Canadian company will continue to supply components and spare parts.
Under the agreement, Bombardier will also retain certain liabilities representing a portion of the credit and residual value guarantees totaling some $400 million. Bombardier’s interest in the Regional Aircraft Securitization Program (RASPRO), valued at about $180 million, will go to MHI.
The sides expect the transaction to close during the first half of 2020 following regulatory approvals and customary closing conditions.
The agreement comes some three weeks after MHI confirmed it had reached an advanced stage of negotiation with Bombardier over the potential acquisition. That development followed two days after Viking Air parent Longview Capital said it completed the acquisition of Bombardier’s Dash 8 aircraft business and named its new subsidiary De Havilland Aircraft of Canada Limited. That deal followed the more celebrated sale of a controlling stake in the Bombardier C Series to Airbus last July, in which the Quebec government now shares a minority position with the Canadian manufacturer under what on June 1 became known as the Airbus Canada Limited Partnership.
In a statement released Tuesday, MHI said the acquisition will complement its existing commercial aircraft business, namely the development, production, sales, and support of the Mitsubishi SpaceJet commercial aircraft family. It noted that the CRJ program’s maintenance and engineering would aid critical customer support functions, what MHI called a strategic business area.
“This transaction represents one of the most important steps in our strategic journey to build a strong, global aviation capability," said MHI president and CEO Seiji Izumisawa.
“The CRJ program has been supported by tremendously talented individuals. In combination with our existing infrastructure and resources in Japan, Canada, and elsewhere, we are confident that this represents one effective strategy that will contribute to the future success of the Mitsubishi SpaceJet family.”
Bombardier president and CEO Alain Bellemare added that the deal would prove to be the best “solution” for airline customers, employees, and shareholders.
“With our aerospace transformation now behind us, we have a clear path forward and a powerful vision for the future,” he said. “Our focus is on two strong growth pillars: Bombardier Transportation, our global rail business, and Bombardier Aviation, a world-class business jet franchise with market-defining products and an unmatched customer experience.”