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Wabtec and GE Transportation complete merger

25 Feb 2019

USA: The merger of Wabtec Corp and GE Transportation was completed on February 25, with Wabtec President & CEO Raymond T Betler describing the transaction as a ‘once-in-a-lifetime opportunity to bring together nearly four centuries of collective experience to create a technologically advanced leader with a highly complementary set of capabilities to move and improve the world.’

General Electric announced in November 2017 that it was looking to dispose of its Transportation business, and a merger agreement with Wabtec was announced in May 2018. The US Department of Justice closed its review of the merger last month.

Under the deal, GE sold a portion of GE Transportation assets to Wabtec, and spun-off a portion of GE Transportation to GE shareholders as Transportation Systems Holdings Inc, which then merged with a wholly-owned subsidiary of Wabtec.

Wabtec shareholders own 50·8% of the combined business on a fully diluted basis and GE shareholders 24·3%, while GE owns common stock and non-voting convertible preferred stock representing a 24·9% economic interest. GE also received approximately $2·9bn in cash.

GE Chairman & CEO H Lawrence Culp Jr said the transaction was ‘good for GE shareholders, who gain equity in an organisation at the forefront of rail innovation; for GE, as we work to reduce leverage and strengthen our balance sheet; and for Wabtec, which now has a stronger and more diversified business mix to serve its customers.‘

Wabtec said the combination of its rail products with GE Transportation’s rail, mining, marine, stationary power and drilling technology would create a leading supplier of equipment and aftermarket services, accelerate industry automation, expand the range of monitoring and repair services offered, and drive increased value for shareholders.

The combined business will be on the Fortune 500 list of the biggest US companies by revenue. It has 27 000 employees and an order backlog of more than $23bn, with revenue of more than US$8bn expected in 2019. Around 65% of its activities are in the freight sector and 35% in the passenger market, with 45% of revenue from OEM activities and 55% from after-market services; 55% of revenue comes from outside the USA.

‘Our shared focus on innovation, collaboration and continuous improvement will enable us to unlock new value for our shareholders, customers, employees and the industry’, said Rafael Santana, the former President & CEO of GE Transportation who is now President & CEO of Wabtec’s Freight segment. ‘Together we are well positioned to take advantage of the opportunities created by industry trends toward efficiency and improved performance and, with the merger complete, we are focused on leveraging our complementary portfolios to spur growth.’