China train makers seek controlling stake in Bombardier railway unit

China's top two train makers have been in discussions with Bombardier about possibly buying a controlling stake in the Canadian company's railway unit, two sources said.

China CNR and CSR, now in the process of merging to create the world's biggest railway company, were 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 could not move forward until after the Chinese train makers complete a planned US$26 billion merger next month, a source close to one of the Chinese companies said.

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.

It 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 CSR executive Xu Houguang, while Zhang Yong, an executive at CNR, also said he had no knowledge of the talks.