US-based Wabtec has confirmed its plans to acquire French rail products firm Faiveley Transport for a total purchase price of $1.8bn, including assumed debt.
The acquisition is expected to create one of the world’s largest public rail equipment supply companies, with revenues between $4bn and $5bn in the worldwide freight rail and passenger transit industry.
The proposed combination would improve Faiveley Transport’s operations in the long term.
“The strong commitment of the Faiveley family as long-term shareholders is a testimony of the powerful industrial rationale of the proposed combination.”
Faiveley Transport, which employs 5,700 people in 24 countries, reported annual sales of $1.2bn in the 2014-2015 financial year.
The company manufactures and supplies products ranging from braking systems and couplers, passenger access systems and platform screen doors, air-conditioning, power collectors and converters, and passenger information systems.
Under the deal, Wabtec offers all shareholders of Faiveley to purchase their shares for a consideration consisting of 25% of cash at a value of €100 a share, and 75% of Wabtec preferred shares.
Wabtec expects that following completion of regulatory staff consultation, these shareholders will enter into a definitive agreement.
Faiveley Transport chairman of the management board and chief executive officer Stéphane Rambaud-Measson said: “The combination of our operations with Wabtec would be an excellent strategic move for Faiveley Transport. Our complementarity is remarkable, both in terms of product portfolios and geographies.
“This transaction would enable us to pursue our ambition to become a global leader in railway equipment and services in passenger transit. Faiveley Transport would double-size with the contribution of Wabtec’s transit division, thus enlarging the French industrial footprint of the group.
“The strong commitment of the Faiveley family as long-term shareholders is a testimony of the powerful industrial rationale of the proposed combination.”
Following completion of the deal, Rambaud-Measson will join Wabtec as president and chief executive officer of Wabtec’s Faiveley Transport group and as Wabtec corporate executive vice-president.
Wabtec president and chief executive officer Raymond Betler said: “Faiveley Transport’s transit business would become the basis for our offerings in this sector and expand our reach in Europe and Asia-Pacific in particular.”
Wabtec provides value-added, technology-based products and services for freight rail, passenger transit and other industrial segments.
It also manufactures a range of products for locomotives, freight cars and passenger transit vehicles, new switcher and commuter locomotives and provides aftermarket services.
