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Wabtec, GE Transportation Merge To Form Transportation Systems Holdings In $11 Billion Deal

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Wabtec, GE Transportation Merge To Form Transportation Systems Holdings In $11 Billion Deal
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Westinghouse Air Brake Technologies Corp (NYSE: WAB) will merge with the transportation segment of General Electric Company (NYSE: GE) to create Transportation Systems Holdings, a rail equipment, services and software supplier, according to a Monday announcement.

“Both businesses are expected to benefit from the cyclical tailwinds they are experiencing as industry conditions improve,” the press release read. “Complementary businesses and large global installed base will create additional opportunities for cross-selling, aftermarket services growth and new solutions in a rapidly evolving industry.”

Wabtec will close the transaction with 49.9 percent of the combined entity, higher margins, $8 billion in revenues, and about 15-percent bottom-line accretion in one year.

GE will receive $2.9 billion in cash, own 50.1 percent of Wabtec, and grow adjusted earnings before interest, tax, depreciation and amortization (EBITDA) an estimated 20 percent over the next year.

“GE Transportation is positioned for a substantial rebound,” the release read.

The parties expect the $11.1 billion transaction to generate annual run-rate synergies of $250 million with free cash flow supporting rapid debt reduction and maintenance of Wabtec’s regular dividend.

GE shares popped 2.5 percent and Wabtec 2.2 percent in pre-market trading on the news.

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Photo courtesy of GE.

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