CHINA’S top two trainmakers have been in discussions with Bombardier Inc. about possibly buying a controlling stake in the Canadian company’s railway unit, two sources with direct knowledge of the matter said.

    China CNR Corp. and CSR Corp., now in the process of merging to create the world’s biggest railway company, are exploring a stake purchase of the Bombardier unit, complementing China’s plan to sell its high-speed rail technology abroad, the sources said.

    But discussions can not move forward until after the Chinese trainmakers complete a planned US$26 billion merger next month, said a person close to one of the Chinese companies.

    Canada’s Bombardier has been exploring a possible sale of all or part of its railway business as it seeks to pay for the huge cost overruns in its aircraft business, Reuters reported this month.

    The Canadian firm is working with banks on strategic options, that also include a possible initial public offering either in Germany, where the business is based, or in Britain. Bankers value a possible deal at up to US$5 billion.

    “I have no knowledge of this matter,” said Xu Houguang, a CSR executive. Zhang Yong, an executive at CNR, also said he had no knowledge of this matter.

    Bombardier spokeswoman Isabelle Rondeau declined to comment: “We will not comment on any speculation.”

    In February, Bombardier said it “will explore other initiatives such as certain business activities’ potential participation in industry consolidation.”

    CNR and CSR are already the world’s largest trainmakers by revenue but the bulk of their sales are from domestic contracts.

    A purchase of Bombardier’s rail assets would “open the doors for the Chinese to all Western train markets,” one of the sources with direct knowledge of the situation said.

    “It would be the most concrete example of China executing on its ‘One Belt, One Road’ strategy,” the source said, referring to China’s aim to create a modern Silk Road economic belt through a network of infrastructure links through Central, West and South Asia to Europe and Africa. (SD-Agencies)