DaimlerChrysler sells train division

Adtranz's new owner Bombardier will be helping build Germany's new high-speed trains

The German-US motor giant DaimlerChrysler has sold its Adtranz rail division to Canada's Bombardier for $725m (£485m).

The deal, announced on Friday, marks another major step in the carmaker's efforts to rationalise.

DaimlerChrysler chairman Jürgen Schrempp said: "We are increasingly focusing our portfolio on our automotive activities and automotive related services.

"Having progressively improved Adtranz's performance to break-even point, it is now an appropriate time to combine Adtranz with a company which values rail activities as its core business."

Berlin-based Adtranz, which is a member of the consortium building Germany's next generation of high-speed trains, has struggled to make profits.

Vow to reduce losses

In early 1999, DaimlerChrysler - already half owner of Adtranz - acquired all outstanding shares for about $400m and vowed to reduce losses. Having done so, analysts said DaimlerChrysler is sensibly now returning to what it knows best.

Last month, DaimlerChrysler merged its aerospace division, Dasa, into the European Aeronautic Defence & Space Company (EADS) - the world's third largest aerospace group also formed from France's Aerospatiale Matra and Spain's CASA.

Leading industry position

The Adtranz deal, which is subject to approval by regulatory authorities and DaimlerChrysler's supervisory board, will propel Montreal-based transportation and aerospace group Bombardier to a leading position in the rail industry worldwide.

Bombardier president and chief executive Robert Brown said Adtranz would "complement [Bombardier's] transportation activities in terms of geographical markets, products and services, broader capabilities, expertise and assets."

In 1999, Adtranz sales rose by 7% to $3.4bn (£2.3bn). Sales for the first half of 2000 stood at $1.7bn (£1.1bn), DaimlerChrysler said.

Bombardier shares rose to a near 12-month high of C$23.80 ($16.08; £10.73) on the Toronto Stock Exchange in heavy trade on Thursday before being suspended.