Bombardier won’t sell to competitors

It’s not likely that anyone from the powersports industry will wind up owning a portion of the Bombardier Recreational Products Division, based upon announcements from the Bombardier family, talks with industry sources and published reports.
Bombardier revealed April 3, 2003, that it plans to sell the Recreational Products Division as part of a series of moves to raise cash. The division posted pre-tax earnings of C$138 million for the year ended Jan. 31, 2003.
Speed is a factor in completing the sale, and company officials have said they expect the deal to be finished this year.
In subsequent announcements, the Bombardier family and the Bombardier corporation said that the family wants to be involved in the purchase of the operation that launched the international Bombardier enterprise. Bombardier traces its roots to 1942 when founder Joseph-Armand Bombardier incorporated the company. Many family members serve in management positions at Bombardier.
At the same time, the company said it would not sell to a direct competitor because of possible delays caused in getting regulatory approvals. Agencies such as the U.S. Federal Trade Commission (FTC) frown on consolidations which give one company more than 50% share of any consumer market.
In a letter to employees dated April 17, 2003, Michel Baril, president and COO of the recreational products unit wrote: “… the business will not be sold to a direct competitor because this will require regulatory approvals, which may be impossible to obtain, or would result in unacceptable delays in closing the transaction.”
Bombardier also has said that it expects to sell the division as a unit in order to maximize its value. Recreational Products produces Ski-Doo snowmobiles, Sea-Doo watercraft and Bombardier ATVs.
It’s most likely, say observers, that the family will put together a consortium of investors, each taking stakes of 5% – 10%. The family could take about 20%, giving it control.

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