The deal to “bring together two global leaders in rail equipment, services and software” is valued at about $11.1 billion.
Wabtec Corporation and GE Transportation announced Monday they are merging in a transaction valued at about $11.1 billion.
According to the announcement, the merger will make Wabtec “a Fortune 500, global transportation leader in rail equipment, software and services with operations in more than 50 countries.”
Under the agreement, which has been approved by the boards of directors of both companies, GE will receive $2.9 billion in cash at closing. GE and its shareholders will receive a 50.1 percent ownership interest in the combined company, with Wabtec shareholders retaining 49.9 percent of the combined company.
Albert J. Neupaver has been reappointed executive chairman of Wabtec, effective immediately, while Raymond T. Betler remains its president and CEO. Following the completion of the transaction, Stéphane Rambaud-Measson will become president and CEO of Wabtec’s transit segment and Rafael Santana, president and CEO of GE Transportation, will become president and CEO of Wabtec’s freight segment.
“The combination will bring together two global leaders in rail equipment, services and software, combining GE Transportation, a global digital industrial leader and supplier to the rail, mining, marine, stationary power and drilling industries, with Wabtec’s broad range of freight, transit and electronics solutions. Wabtec and GE shareholders will have ownership in a combined company with significantly expanded margins, a highly attractive growth profile based on an improved business mix, expanded global reach and faster innovation in key growth areas,” the announcement said.
Following the completion of the transaction, Wabtec’s corporate headquarters will remain in Wilmerding, Pa. Wabtec’s freight segment will be headquartered in Chicago, and its transit segment headquarters will remain in Paris.
For the fiscal year ending Dec. 31, 2017, Wabtec generated about $3.9 billion revenue and $504 million in adjusted EBIT. For the same period, GE Transportation generated about $3.9 billion in revenue and $701 million in adjusted EBIT.
The transaction is expected to close in early 2019, pending regulatory approvals and other customary closing conditions.
The companies said the merger will:
• “Drive increased value for shareholders: With approximately $8 billion in combined revenues and a large global installed base, the combined company will have a leading position in key freight rail and transit geographies worldwide and will be well-positioned to serve customers as industry demand continues to improve. Investors are expected to benefit through ownership of a stronger, more diverse business better positioned to perform through the cycle, with expected annual double-digit EPS growth and total run-rate synergies of about $250 million estimated to be achieved by 2022. Furthermore, the transaction will facilitate a tax step-up with an NPV of approximately $1.1 billion of net tax benefit accruing to the combined company.
• “Create a leading equipment, aftermarket services and digital solutions provider across the transportation ecosystem: From factory to final destination — and every point in between — the combined company will have the capabilities to accelerate lifecycle solutions for the transportation industry and unlock significant productivity for customers by improving interoperability, efficiency and competitiveness.
• “Capitalize on digital/electronic technologies to develop autonomous capabilities: Bringing together GE Transportation’s digital solutions with Wabtec’s electronic systems is expected to drive the advancement and implementation of technology solutions to improve safety, efficiency and productivity for the transportation industry. This combination will create a compelling offering to meet the industry’s rapidly growing demand for rail performance, with the potential to unlock billions in annual savings across freight rail for customers and operators.
• “Generate growth opportunities through the extensive installed base and attractive global footprint: The combined company will be a leading global freight and transit rail provider with more than 23,000 locomotives in its global installed base and content on virtually all locomotives and freight cars in North America, creating significant opportunities for aftermarket parts and services in key regions around the world.”
Wabtec President and CEO Betler said, “By bringing together our highly complementary strengths, we are confident that this transformational combination will create value for both Wabtec and GE shareholders, innovative solutions for our customers and new outlets for long-term career growth for our employees. Our two companies have more than 250 years of rail industry heritage, and our shared focus on safety, reliability, quality and customer relationships will enable a smooth integration.”
GE Transportation announced it March that it was expanding a pilot data project to digitize and harmonize disparate supply chain data flows and increase visibility, efficiency and cargo velocity to the Port of Long Beach.
According to the announcement, the merger will make Wabtec “a Fortune 500, global transportation leader in rail equipment, software and services with operations in more than 50 countries.”
Under the agreement, which has been approved by the boards of directors of both companies, GE will receive $2.9 billion in cash at closing. GE and its shareholders will receive a 50.1 percent ownership interest in the combined company, with Wabtec shareholders retaining 49.9 percent of the combined company.
Albert J. Neupaver has been reappointed executive chairman of Wabtec, effective immediately, while Raymond T. Betler remains its president and CEO. Following the completion of the transaction, Stéphane Rambaud-Measson will become president and CEO of Wabtec’s transit segment and Rafael Santana, president and CEO of GE Transportation, will become president and CEO of Wabtec’s freight segment.
“The combination will bring together two global leaders in rail equipment, services and software, combining GE Transportation, a global digital industrial leader and supplier to the rail, mining, marine, stationary power and drilling industries, with Wabtec’s broad range of freight, transit and electronics solutions. Wabtec and GE shareholders will have ownership in a combined company with significantly expanded margins, a highly attractive growth profile based on an improved business mix, expanded global reach and faster innovation in key growth areas,” the announcement said.
Following the completion of the transaction, Wabtec’s corporate headquarters will remain in Wilmerding, Pa. Wabtec’s freight segment will be headquartered in Chicago, and its transit segment headquarters will remain in Paris.
For the fiscal year ending Dec. 31, 2017, Wabtec generated about $3.9 billion revenue and $504 million in adjusted EBIT. For the same period, GE Transportation generated about $3.9 billion in revenue and $701 million in adjusted EBIT.
The transaction is expected to close in early 2019, pending regulatory approvals and other customary closing conditions.
The companies said the merger will:
• “Drive increased value for shareholders: With approximately $8 billion in combined revenues and a large global installed base, the combined company will have a leading position in key freight rail and transit geographies worldwide and will be well-positioned to serve customers as industry demand continues to improve. Investors are expected to benefit through ownership of a stronger, more diverse business better positioned to perform through the cycle, with expected annual double-digit EPS growth and total run-rate synergies of about $250 million estimated to be achieved by 2022. Furthermore, the transaction will facilitate a tax step-up with an NPV of approximately $1.1 billion of net tax benefit accruing to the combined company.
• “Create a leading equipment, aftermarket services and digital solutions provider across the transportation ecosystem: From factory to final destination — and every point in between — the combined company will have the capabilities to accelerate lifecycle solutions for the transportation industry and unlock significant productivity for customers by improving interoperability, efficiency and competitiveness.
• “Capitalize on digital/electronic technologies to develop autonomous capabilities: Bringing together GE Transportation’s digital solutions with Wabtec’s electronic systems is expected to drive the advancement and implementation of technology solutions to improve safety, efficiency and productivity for the transportation industry. This combination will create a compelling offering to meet the industry’s rapidly growing demand for rail performance, with the potential to unlock billions in annual savings across freight rail for customers and operators.
• “Generate growth opportunities through the extensive installed base and attractive global footprint: The combined company will be a leading global freight and transit rail provider with more than 23,000 locomotives in its global installed base and content on virtually all locomotives and freight cars in North America, creating significant opportunities for aftermarket parts and services in key regions around the world.”
Wabtec President and CEO Betler said, “By bringing together our highly complementary strengths, we are confident that this transformational combination will create value for both Wabtec and GE shareholders, innovative solutions for our customers and new outlets for long-term career growth for our employees. Our two companies have more than 250 years of rail industry heritage, and our shared focus on safety, reliability, quality and customer relationships will enable a smooth integration.”
GE Transportation announced it March that it was expanding a pilot data project to digitize and harmonize disparate supply chain data flows and increase visibility, efficiency and cargo velocity to the Port of Long Beach.
