Wabtec Corporation (NYSE: WAB) today filed an amended preliminary
proxy statement with the SEC relating to its proposed combination
with GE Transportation. Wabtec and GE Transportation are
progressing the proposed transaction toward an anticipated closing
by the first quarter of 2019.
Albert J. Neupaver, Wabtec’s executive chairman, said: “Today’s
proxy filing reiterates and reinforces the strategic and financial
logic of our planned combination with GE Transportation, to form a
diversified, global leader for rail equipment, services and
software. We are even more confident than when we announced
the transaction in May that this combination will serve the best
long-term interests of our shareholders.”
As outlined in May, the strategic and financial rationale for
the GE Transportation transaction remains compelling and unchanged.
After the Merger:
- Wabtec shareholders will have ownership in a combined company
with a highly attractive growth profile based on an improved
business mix, expanded global reach and faster innovation
- Wabtec expects to have approximately $8 billion in revenues, a
more diversified business mix and higher margins
- The agreement was reached at an attractive point in the cycle,
with the GE Transportation business still expected to deliver more
than 600 locomotives annually by 2021, resulting in a double-digit
CAGR over the 2018 to 2021 period
- Wabtec believes that the transaction has a highly compelling
financial rationale, with materially consistent expectations for
both GE Transportation and the pro forma combined business as
presented in May:° GE Transportation’s adjusted EBITDA expected to
be between $900 million and $1 billion in 2019;° GE
Transportation’s adjusted EBIT expected to be between $800 million
and $900 million in 2019;° Expected to be immediately accretive to
margins, generating strong cash flow to the combined business and
resulting in ~15% cash EPS accretion in Year 1;° $250 million of
anticipated run-rate synergies expected to be achieved by Year 4;°
Approximately $150 million of annual cash tax savings expected for
next 15 years; and° Cumulative free cash flow of approximately $6
billion expected from 2019-2022 for the combined business.
- Strong free cash flow profile expected to enable rapid
deleveraging, supporting Wabtec’s commitment to retaining its
investment grade rating and dividend; total debt/adjusted EBITDA is
expected to be <2.5x by year-end 2019.
Today’s amended preliminary proxy statement includes a minor
adjustment to harmonize GE Transportation’s historical financial
information with Wabtec’s revenue recognition accounting policies
for the purpose of the preparation of required pro forma financial
statements. This harmonization is expected to result in a $63
million decrease in forecasted combined consolidated net revenue
and EBIT in 2019, with no material effect in future years.
The accounting policy harmonization does not materially affect
Wabtec’s future reported consolidated cash from operations. As is
common in transactions of this nature, other adjustments may be
required to conform to Wabtec’s accounting policies, but they are
not expected to be material. In addition, non-cash
amortization expense from purchase price accounting will impact the
results of operations.
Wabtec Corporation is a leading global provider of equipment,
systems and value-added services for transit and freight
rail. Through its subsidiaries, Wabtec manufactures a range
of products for locomotives, freight cars and passenger transit
vehicles. Wabtec also builds new switcher and commuter locomotives,
and provides aftermarket services. Wabtec has facilities located
throughout the world.
Additional Information and Where to Find ItIn
connection with the proposed transaction between General Electric
Company (“GE”) and Wabtec, Transportation Systems Holdings Inc., a
wholly owned subsidiary of GE created for the transaction
(“SpinCo”), will file with the SEC a registration statement on Form
S-4/S-1 containing a prospectus or a registration statement on Form
10 and Wabtec will file with the SEC a registration statement on
Form S-4 and a definitive proxy statement on Schedule 14A. If the
transaction is effected via an exchange offer, GE will also file
with the SEC a Schedule TO with respect thereto. This communication
is not a substitute for any definitive proxy statement,
registration statement, proxy statement/prospectus or other
documents GE, Wabtec and/or SpinCo may file with the SEC in
connection with the proposed transaction. INVESTORS AND SECURITY
HOLDERS ARE URGED TO READ CAREFULLY AND IN THEIR ENTIRETY THESE
DOCUMENTS WHEN THEY BECOME AVAILABLE, ANY AMENDMENTS OR SUPPLEMENTS
TO THESE DOCUMENTS, AND OTHER DOCUMENTS FILED BY GE, WABTEC OR
SPINCO WITH THE SEC IN CONNECTION WITH THE PROPOSED TRANSACTION,
BECAUSE THESE DOCUMENTS WILL CONTAIN IMPORTANT INFORMATION.
Investors and security holders will be able to obtain free copies
of these materials and other documents filed with the SEC by GE,
Wabtec and/or SpinCo through the website maintained by the SEC at
www.sec.gov. Investors and security holders will also be able to
obtain free copies of the documents filed by GE, Wabtec and/or
SpinCo with the SEC from the respective companies by directing a
written request to GE and/or SpinCo at General Electric Company, 41
Farnsworth Street, Boston, Massachusetts 02210 or by calling
617-443-3400, or to Wabtec at Wabtec Corporation, 1001 Air Brake
Avenue, Wilmerding, PA 15148 or by calling 412-825-1543.
No Offer or SolicitationThis communication is
for informational purposes only and not intended to and does not
constitute an offer to subscribe for, buy or sell, the solicitation
of an offer to subscribe for, buy or sell, or an invitation to
subscribe for, buy or sell, any securities or the solicitation of
any vote or approval in any jurisdiction pursuant to or in
connection with the proposed transaction or otherwise, nor shall
there be any sale, issuance or transfer of securities in any
jurisdiction in contravention of applicable law. No offer of
securities shall be made except by means of a prospectus meeting
the requirements of Section 10 of the Securities Act of 1933, as
amended, and otherwise in accordance with applicable law.
Participants in the SolicitationThis
communication is not a solicitation of a proxy from any investor or
security holder. GE, Wabtec, SpinCo, their respective directors,
executive officers and other members of their management and
employees may be deemed to be participants in the solicitation of
proxies from shareholders of Wabtec in connection with the proposed
transaction. Information regarding the persons who may, under the
rules of the SEC, be deemed participants in the solicitation of
proxies in connection with the proposed transaction, including a
description of their direct or indirect interests, by security
holdings or otherwise, will be set forth in the relevant materials
when filed with the SEC. Information regarding the directors and
executive officers of GE is contained in GE’s proxy statement for
its 2018 annual meeting of shareholders, filed with the SEC on
March 12, 2018, its Annual Report on Form 10-K for the year ended
December 31, 2017, which was filed with the SEC on February 23,
2018, its Quarterly Report on Form 10-Q for the quarter ended June
30, 2018, which was filed with the SEC on July 27, 2018 and certain
of its Current Reports filed on Form 8-K. Information regarding the
directors and executive officers of Wabtec is contained in Wabtec’s
proxy statement for its 2018 annual meeting of shareholders, filed
with the SEC on April 5, 2018, Amendment No.1 to its preliminary
proxy statement, which was filed with the SEC on September 17,
2018, its Annual Report on Form 10-K for the year ended December
31, 2017, which was filed with the SEC on February 26, 2018, its
Quarterly Report on Form 10-Q for the quarter ended June 30, 2018
which was filed with the SEC on July 31, 2018 and certain of its
Current Reports filed on Form 8-K. These documents can be obtained
free of charge from the sources indicated above.
Caution Concerning Forward-Looking
StatementsThis communication contains “forward-looking”
statements as that term is defined in Section 27A of the Securities
Act of 1933, as amended, and Section 21E of the Securities Exchange
Act of 1934, as amended by the Private Securities Litigation Reform
Act of 1995, including statements regarding the proposed
transaction between GE and Wabtec. All statements, other than
historical facts, including statements regarding the expected
timing and structure of the proposed transaction; the ability of
the parties to complete the proposed transaction considering the
various closing conditions; the expected benefits of the proposed
transaction, including future financial and operating results, the
tax consequences of the proposed transaction, and the combined
company’s plans, objectives, expectations and intentions; legal,
economic and regulatory conditions; and any assumptions underlying
any of the foregoing, are forward-looking statements.
Forward-looking statements concern future circumstances and
results and other statements that are not historical facts and are
sometimes identified by the words “may,” “will,” “should,”
“potential,” “intend,” “expect,” “endeavor,” “seek,” “anticipate,”
“estimate,” “overestimate,” “underestimate,” “believe,” “could,”
“project,” “predict,” “continue,” “target” or other similar words
or expressions. Forward-looking statements are based upon current
plans, estimates and expectations that are subject to risks,
uncertainties and assumptions. Should one or more of these risks or
uncertainties materialize, or should underlying assumptions prove
incorrect, actual results may vary materially from those indicated
or anticipated by such forward-looking statements. The inclusion of
such statements should not be regarded as a representation that
such plans, estimates or expectations will be achieved. Important
factors that could cause actual results to differ materially from
such plans, estimates or expectations include, among others, (1)
that one or more closing conditions to the transaction, including
certain regulatory approvals, may not be satisfied or waived, on a
timely basis or otherwise, including that a governmental entity may
prohibit, delay or refuse to grant approval for the consummation of
the proposed transaction, may require conditions, limitations or
restrictions in connection with such approvals or that the required
approval by the shareholders of Wabtec may not be obtained; (2) the
risk that the proposed transaction may not be completed on the
terms or in the time frame expected by GE or Wabtec, or at all; (3)
unexpected costs, charges or expenses resulting from the proposed
transaction; (4) uncertainty of the expected financial performance
of the combined company following completion of the proposed
transaction; (5) failure to realize the anticipated benefits of the
proposed transaction, including as a result of delay in completing
the proposed transaction or integrating the businesses of GE,
Wabtec and SpinCo; (6) the ability of the combined company to
implement its business strategy; (7) difficulties and delays in
achieving revenue and cost synergies of the combined company; (8)
inability to retain and hire key personnel; (9) the occurrence of
any event that could give rise to termination of the proposed
transaction; (10) the risk that shareholder litigation in
connection with the proposed transaction or other settlements or
investigations may affect the timing or occurrence of the proposed
transaction or result in significant costs of defense,
indemnification and liability; (11) evolving legal, regulatory and
tax regimes; (12) changes in general economic and/or industry
specific conditions; (13) actions by third parties, including
government agencies; and (14) other risk factors as detailed from
time to time in GE’s and Wabtec’s respective reports filed with the
SEC, including GE’s and Wabtec’s annual reports on Form 10-K,
periodic quarterly reports on Form 10-Q, periodic current reports
on Form 8-K and other documents filed with the SEC. The foregoing
list of important factors is not exclusive.
Any forward-looking statements speak only as of the date of this
communication. Neither GE nor Wabtec undertakes any obligation to
update any forward-looking statements, whether as a result of new
information or development, future events or otherwise, except as
required by law. Readers are cautioned not to place undue reliance
on any of these forward-looking statements.
Contact: |
Tim
Wesley |
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Phone:
412.825.1543 |
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Wabtec Corporation |
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E-mail: twesley@wabtec.com |
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1001 Air Brake
Avenue |
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Website: www.wabtec.com |
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Wilmerding, PA
15148 |
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