The total purchase price is about €1.6bn or $US1.7bn, including assumed debt and net of cash acquired. Wabtec acquired the Faiveley family stake for about €200m in cash (€100 per Faiveley Transport share) and 6.3 million shares of Wabtec common stock. Faiveley Transport shareholders have the option to receive €100 per Faiveley Transport share in cash or to exchange their shares at the rate of 13 Faiveley Transport shares for 15 Wabtec common stock, under the same financial conditions as for the Faiveley family.
Wabtec says the takeover will create one of the world’s largest rail equipment companies, with revenues of about $US 4.2bn, and it expects to realise at least $US 50m in annual pre-tax synergies from the combination by year three.
“The acquisition of Faiveley Transport is an excellent strategic fit, expanding our geographic presence, broadening our product and service capabilities, and strengthening our technology and innovation initiatives,” says Wabtec’s executive chairman Mr Albert Neupaver. “The combination of two rail industry leaders creates compelling growth opportunities and synergies, and strengthens the diversity of our revenue base.”
Mr Raymond Betler, Wabtec’s president and CEO, says the merger results in “many complementary products, and a strong presence in the European and Asia Pacific transit industries.”
Ms Stéphane Rambaud-Measson, Faiveley Transport’s management board chairman and CEO, has joined Wabtec as president and CEO of its Transit Group, which will trade as Faiveley Transport, and as a corporate executive vice-president. Mr Guillaume Bouhours, member of the management board and CFO of Faiveley Transport, has been appointed senior vice-president and Transit Group CFO.
As a result of the takeover, Wabtec says it expects its annual revenues to fall by about 10% to around $US 2.95bn in 2016. However, for 2017 Wabtec forecasts annual revenue of $US 4.2bn, with an adjusted operating margin of about 15-16% and adjusted earnings about 8% higher than in 2016 excluding restructuring and transaction-related costs.