Wabtec Corp. and GE Transportation, a unit of General Electric, will merge, creating a global transportation leader in rail equipment, software and services.
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The merger agreement, which has been approved by both companies’ boards and is expected cut costs, is for GE to receive $2.9 billion in cash from Westinghouse Air Brake Technologies, also known as Wabtec, at closing. 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.
The combination is expected to drive double-digit earnings per share growth and cut costs of about $250 million by 2022. Further, the merger will result in approximately $1.1 billion of net tax benefit to the combined company. Revenues of the combined entity are expected to be about $8 billion
Effective immediately, Wabtec Chairman Albert J. Neupaver has been re-appointed executive chairman of the company, while Raymond T. 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 transaction is expected to close in early 2019.
Shares of both GE and Wabtec were up more than 2 percent in premarket action.
Wabtec, has about 18,000 employees, sells to the freight and passenger transit rail, transit bus, power generation, marine, oil and gas and off-highway equipment industries.