On May 21, the Boards of Directors of Wabtec and General Electric approved the USD 11.1 billion merger. Under the agreement, GE will receive USD 2.9 billion in cash closing and GE and its shareholders will receive a 50.1% ownership interest in the combined company, with Wabtec shareholders retaining 49.9% of the combined company. It is planned that GE shareholders will own approximately 40.2%, and GE will own 9.9% of the merged company on a fully diluted basis. GE has the right to increase the portion of the merged company owned by GE shareholders.
Wabtec has obtained full commitments for a USD 2.9 billion bridge facility and expects to put in place permanent debt financing prior to closing. The company is committed to maintaining a strong investment grade credit rating profile and will use its strong cash flow to prioritize debt reduction.
The transaction is expected to close in early 2019, subject to customary closing conditions, approval by Wabtec shareholders, and regulatory approvals.
With approximately USD 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.
Effective immediately, Wabtec Chairman Albert Neupaver has been re-appointed executive chairman of the company, while Raymond Betler remains Wabtec’s 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 make Wabtec a Fortune 500, global transportation leader in rail equipment, software and services, with operations in more than 50 countries. The GE Transportation business is positioned for a significant rebound, with estimated adjusted EBITDA growing from about USD 750 million in 2018 to between USD 900 million and USD 1 billion in 2019. The backlog of approximately USD 18 billion includes about 1,800 new locomotives and approximately 1,000 to be modernized. GE Transportation has received USD 3.6 billion in orders in the last two quarters. Wabtec reported a strong Q1, also forecasting robust growth for the year with record backlog.
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