Wabtec Buys 51% Stake In Faiveley Transport; Updates FY16 View - Quick Facts

(RTTNews) - Westinghouse Air Brake Technologies Corp., doing business as Wabtec Corp. (WAB), on Thursday said it has acquired Faiveley family's about 51 percent stake in Faiveley Transport S.A. for about $212 million in cash and 6.3 million Wabtec shares.

The company plans to launch a tender offer for the remaining public shares in December. Through the tender offer, the public shareholders of Faiveley Transport will have the option to elect to receive 100 euros per share of Faiveley Transport in cash or 1.1538 Wabtec common shares per share of Faiveley Transport.

The total purchase price for 100% of the shares of Faiveley Transport is about $1.7 billion, including assumed debt and net of cash acquired.

The company said the $1.2 billion cash portion of the transaction will be funded from about $325 million of cash on hand, the net proceeds from a recent $750 million senior notes offering and the company's existing revolving credit facility and term note.

Faiveley Transport is a provider of value-added, integrated systems and services for the railway industry with annual sales of about $1.2 billion.

The company expects the strategic combination of Wabtec and Faiveley Transport would generate a major rail equipment company, with revenues of about $4.2 billion.

Wabtec now expects to realize at least $50 million in annual pre-tax synergies from the combination by year three, and the transaction will be accretive to Wabtec's earnings per diluted share in 2017.

Stéphane Rambaud-Measson, chairman of the Management Board and chief executive officer of Faiveley Transport, has joined Wabtec as president and CEO of its Transit Group and as a corporate executive vice president, reporting to Betler. Also, Philippe Alfroid and Erwan Faiveley were elected as new members of the Wabtec Board of Directors.

Including the effects of the acquisition, Wabtec updated its 2016 guidance and now expects earnings per share are to be between $3.45-$3.50, and adjusted earnings per share to be between $3.95-$4.00.

Full-year revenues are expected to be down about 10% to about $2.95 billion.

On average, 12 analysts polled by Thomson Reuters expect earnings of $4.02 per share on revenues of $2.91 billion for the year. Analysts' estimates typically exclude special items.

Including the effects of the acquisition, Wabtec expects full year of 2017 adjusted earnings to be about 8% higher than the previous year, and revenues are expected to be about $4.2 billion. Analysts expect earnings of $4.17 per share on revenues of $3.03 billion for fiscal 2017.