Wabtec Plans To Acquire Faiveley Transport For About $1.8 Bln, Incl. Debt.

(RTTNews) - Wabtec Corp. (WAB) said it plans to acquire Faiveley Transport S.A. , a provider of value-added, integrated systems and services for the railway industry with annual sales of about $1.2 billion. The total purchase price is about $1.8 billion, including assumed debt.

Wabtec noted that it plans to fund the cash portion of the transaction with cash on hand, existing credit facilities and potentially other debt financing.

The transaction has been structured in three steps:

Wabtec has made an irrevocable offer to the owners of approximately 51% of Faiveley Transport's shares for a purchase price of 100 per share euros, payable 25% in cash and 75% in Wabtec preferred stock. The preferred stock will have a 1% annual dividend or, if greater, the dividend assuming full conversion into common shares, and must be converted after three years into Wabtec common shares at an implied ratio of one Faiveley Transport common share for 1.125 Wabtec common shares. Shareholders owning 51% of Faiveley Transport have entered into exclusive discussions with Wabtec.

Upon completion of required labor group consultations, Wabtec expects that the 51% shareholders will enter into a definitive share purchase agreement and Faiveley Transport will enter into a transaction agreement with Wabtec.

Upon completing the share purchase, Wabtec will commence a tender offer for the remaining publicly traded Faiveley Transport shares. The public shareholders will have the option to elect to receive 100 euros per share or Wabtec preferred stock. The preferred stock portion of the consideration is subject to a cap of 75% of Faiveley Transport's common shares. Wabtec intends to delist Faiveley Transport from Euronext after the tender offer if minority interests represent less than 5%.

Wabtec expects to realize at least 40 million euros in annual pre-tax synergies from the combination, and the transaction is expected to be accretive to Wabtec's earnings per diluted share in 2016.

Faiveley Transport's headquarters in Gennevilliers, France will become Wabtec's global transit headquarters, under the Faiveley Transport brand name. Wabtec also intends to maintain the existing Faiveley Transport human resources policy in Europe for a period of at least 18 months after closing and to complement the company's existing Centers of Competencies for engineering and research and development, in line with Faiveley Transport's 2018 Strategic Plan presented in May 2015.

Founded more than 90 years ago, Faiveley Transport has more than 5,700 employees in 24 countries and generated record sales of about $1.2 billion in its most recent fiscal year. In 2005, Faiveley Transport purchased SAB WABCO, a supplier of braking equipment formerly affiliated with Wabtec. Today, Faiveley Transport supplies railway manufacturers, operators and maintenance providers with a range of valued-added, technology-based systems and services in Energy & Comfort , Access & Mobility (passenger access systems and platform doors), and Brakes & Safety (braking systems and couplers).

Upon completion of the transaction, Stéphane Rambaud-Measson, current chairman of the Management Board and chief executive officer of Faiveley Transport, will join Wabtec as president and chief executive officer of Wabtec's Faiveley Transport group and as Wabtec corporate executive vice president, reporting to Betler.