General Electric has agreed to merge its century-old locomotive business with rail-equipment maker Wabtec in a deal valued at $11.1 billion (€9.43 billion), the biggest step yet in chief executive John Flannery's plan to shed unwanted units and revitalise the beleaguered manufacturer.
GE will receive $2.9 billion (€2.46 billion) in cash while the company and its shareholders take a 50.1 per cent stake in the combined entity, according to a statement on Monday. Wabtec shareholders will hold the rest after the tax-free transaction, which is expected to close early next year.
GE put its rail unit on the market last year in an effort to streamline operations and reduce the complexity that Mr Flannery blames for deepening the company’s problems.
The deal is transformative for Wabtec, which will roughly double its annual revenue by adding one of the world’s largest makers of freight locomotives and rail equipment.
Wabtec chief executive Raymond Betler will remain president and chief executive of the merged company while its chairman, Albert Neupaver, has been reappointed executive chairman. – Bloomberg
