General Electric signs $11bn deal with Wabtec

  • General Electric signs $11bn deal with Wabtec

General Electric signs $11bn deal with Wabtec

The transportation business of GE generates revenue of almost $4.7 billion by the manufacture of freight and passenger trains, marine diesel engines and mining equipment among other products.

Wabtec CEO Raymond Betler will stay in his job and Albert Neupaver was reappointed as executive chairman.

GE will receive a Dollars 2.9 billion up-front payment in cash and its shareholders will own 50.1 percent of the combined company, while Wabtec shareholders will own the rest, the companies said in a statement.

GE is selling its locomotive unit at a low point for the business, with the division previous year recording its lowest annual revenue since 2010. The freight segment will be headquartered in Chicago, and Wabtec's transit segment headquarters will remain in Paris. And it's just Wabtec, with none of the ham-handed nonsense that gave us Baker Hughes, a GE Co.

GE put its rail unit on the market in 2017 in an effort to streamline operations and reduce the complexity that Flannery blames for deepening the company's problems. "Complementary businesses and large global installed base will create additional opportunities for cross-selling, aftermarket services growth and new solutions in a rapidly evolving industry".

If the deal to merge GE's underperforming transportation business with Wilmerding, Pennsylvania-based Wabtec goes through, it would represent the company's biggest divestment since Flannery took over as CEO last August. "GE needed to divest and simplify its business".

The combined company will provide more than 23,000 locomotives.

In an effort to broaden its markets, the unit has deployed its "Port Optimizer" technology at US marine facilities to connect all supply chain stakeholders with enhanced shipment visibility. A pilot program has been completed at Los Angeles, and the entire port is expected to go live in July.

Industry analysts project that the merger will boost the growth of GE's transportation business in the near future.

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The GE Transportation business is positioned for a significant rebound, with estimated adjusted earnings before interest, taxes, deprecation and amortization (EBITDA) growing from about $750 million in 2018 to between $900 million and $1 billion in 2019. All comments are eligible for publication in the letters section of DC VELOCITY magazine.