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GE's transportation unit to merge with Wabtec in $11.1bn deal

By Michele Maatouk

Date: Monday 21 May 2018

GE's transportation unit to merge with Wabtec in $11.1bn deal

(Sharecast News) - GE Transportation, a unit of General Electric, has agreed to merge with rail equipment maker Wabtec in a deal valued at £11.1bn.
As part of the deal, which has been approved by the boards of directors of both companies, GE will sell a portion of the assets of GE Transportation to Wabtec, complete the spin-off or split-off of a portion of GE Transportation to GE shareholders and immediately thereafter merge GE Transportation with a wholly owned subsidiary of Wabtec.

GE will receive $2.9bn in cash at closing, while its shareholders will receive a 50.1% interest in the combined company, with Wabtech shareholders retaining 49.9%.

Following the deal, Wabtec will have approximately $8bn in revenues, a more diversified business mix, higher margins, and approximately 15% cash earnings per share accretion in year one.

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.

Raymond Betler, who will be in charge of the combined group, said: "Wabtec and GE Transportation are global industry leaders and we believe that together we have a unique opportunity to drive tremendous growth in 2019 and beyond as the industry continues to improve. 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.

"Together, we can expand our global reach, strengthen our market capabilities and lead digital innovation across the transportation industry. We are seeing growth in rail traffic and recent promising orders for new and modernised locomotives from North American Class I, Shortlines and international railroads, and are confident in the compelling long-term opportunities and synergies before us."

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