Acquisition of Canadair Regional Jet Program from Bombardier Inc. and the Occurrence of Impairment Losses-- Notice of Disclosure Status --
Tokyo, May 7, 2020 – Mitsubishi Heavy Industries, Ltd. (MHI), as announced in “Mitsubishi Heavy Industries to Acquire Canadair Regional Jet Program from Bombardier Inc.” (dated June 25, 2019), had entered into a definitive agreement with Bombardier Inc., whereby MHI will acquire the maintenance, support*1, refurbishment, marketing, and sales activities for the CRJ Series*2 aircraft, along with the type certificates, which is complementary to MHI Group's existing commercial aircraft business.
MHI announced today that it has agreed with Bombardier that all closing conditions have been met and the transaction pertaining to the acquisition of Canadair Regional Jet (CRJ) Program will close on June 1, 2020. Please refer to the press release, “Mitsubishi Heavy Industries Ltd. and Bombardier Inc. have agreed on a June 1, 2020 closing date for the transaction pertaining to the acquisition of Canadair Regional Jet Program,”*3 released today.
The business transfer is an “acquisition” accounted for under IFRS 3 Business Combinations, with goodwill and intangible assets expected to be incurred. After the completion of the transaction, the amount of goodwill and fair value of the assets acquired and liabilities assumed will be measured based on the determined transfer price including working capital adjustment, and the goodwill will be allocated to the relevant cash-generating units. Since it is difficult to estimate the cash flow in the future for the SpaceJet business at present, the full amount of goodwill and other assets allocated to the SpaceJet business unit are planned to be written down in MHI’s consolidated Balance Sheet for the fiscal year ended March 2021, whose forecast amount ranges from 50 billion to 70 billion yen, subject to the fluctuation of the measured amount of goodwill and fair value of the assets acquired and liabilities assumed.
Notes:
- Production and maintenance of service manuals, supply of spare parts, technical support, crew and mechanic training, MRO (maintenance repair and overall), etc.
- The Canadair Regional Jet (CRJ) is a series of small passenger jets seating 50 to 100 persons, manufactured and sold by Bombardier Aerospace, the aircraft division of Bombardier Inc.
- Press release, “Mitsubishi Heavy Industries Ltd. and Bombardier Inc. have agreed on a June 1, 2020 closing date for the transaction pertaining to the acquisition of Canadair Regional Jet Program,”