The $US 11.1bn merger was approved by the boards of Wabtec and General Electric (GE) on May 21 last year. Under the terms of the transaction agreed on January 28, GE sold a portion of GE Transportation’s assets to Wabtec and spun off the business to GE shareholders before GE Transportation merged with a wholly owned subsidiary of Wabtec.

Wabtec shareholders own approximately 50.8% of Wabtec on a fully diluted basis and GE shareholders own around 24.3% of Wabtec on a fully-diluted basis. GE owns common stock and non-voting convertible preferred stock, which together represent around a 24.9% economic interest in Wabtec on a fully-diluted basis. GE also received around $US 2.9bn in cash at closing.

Wabtec has also been notified that it will now be included in the S&P 500 Index. The United States Department of Justice (DOJ) closed its review of the pending merger between Wabtec and GE Transportation on January 14.

The merger combines Wabtec’s range of freight, transit and electronics products with GE Transportation’s equipment, services and digital solutions in the locomotive, mining, marine, stationary power and drilling industries. The merged company brings to market a robust installed base of more than 23,000 locomotives globally, with an expanded international reach with 27,000 employees across 50 countries.

The company will base its corporate headquarters in Pittsburgh, Pennsylvania, with its global freight headquarters in Chicago, Illinois, and its global transit headquarters in Paris, France.

Wabtec - GE Transportation merger synergies

Wabtec says the merger allows the strategic combination of complementary portfolios, which is expected to create a number of synergies including:

  • Creating a leading equipment, aftermarket services and digital solutions provider across the transportation sector, which can accelerate lifecycle solutions for the transportation industry and unlock significant productivity for customers by improving interoperability, efficiency and competitiveness. Wabtec expects to benefit from the cyclical tailwinds the industry saw in 2018, including volume growth of 38 million carloads and intermodal units.
  • Improved utilisation and an accelerated path to automation, with the combination of GE Transportation’s digital solutions and analytics systems with Wabtec’s electronic systems and Positive Train Control (PTC) capabilities expected to improve safety, efficiency and productivity across the industry and accelerate the path to train automation.
  • Deliver improved customer outcomes through expanded monitoring and services, as the combined company will have an expanded footprint of skilled technicians and repair shops. This is expected to drive productivity gains for customers by reducing cycle time, lowering production costs and improving asset performance. The integration of Wabtec products within locomotive control systems and leveraging GE Transportation’s remote monitoring and diagnostics systems is expected to enhance performance monitoring.
  • Drive increased value for shareholders, with forecast average double-digit EPS growth and synergies of about $US 250m. The combined company has a multi-year backlog of more than $US 23bn.

“We are very excited to complete the merger of our two companies,” says Wabtec president and CEO, Mr Raymond T Betler. “This is 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. Our teams have made significant progress in integration planning, and this process has only strengthened our confidence in the value creation potential of the combination.”

“Our shared focus on innovation, collaboration and continuous improvement will enable us to unlock new value for our shareholders, customers, employees and the industry,” says Mr Rafael Santana, who served as president and CEO of GE Transportation and is now president and 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.”

“Today’s update is another important landmark in executing GE’s portfolio strategy,” says GE chairman and CEO, Mr H. Lawrence Culp. “This transaction is 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.”