GE will receive a $2.9bn up-front payment in cash and a 9.9pc stake in the combined company, with GE shareholders awarded 40.2pc and existing Wabtec shareholders owning 49.9pc.
The deal is expected to close in early 2019.
GE's Flannery told shareholders at their annual meeting in April that the company was aware of pain that its poor performance and its cut in dividend caused in 2017. For the record, GE's transport unit, which accrues almost Dollars 4.7 billion for the firm, has manufactured freight & passenger locomotives, mining instrument, and marine diesel engines.
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According to the announcement, Wabtec and GE Transportation will be combined into a wholly owned subsidiary of Wabtec. "It also is one of our most cost-competitive sites and the team has demonstrated the ability to efficiently take on additional work".
Wabtec Executive Chair Albert J. Neupaver will retain his position, as will Wabtec CEO Raymond T. Betler.
GE Transportation generated $3.7 billion in revenue past year but did not fit into CEO John Flannery's strategy of focusing on three core segments: power, including renewable energy, aviation, and health care.
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In November 2017, when GE chair John Flannery confirmed rumours that the company was looking to offload its transport division, reports circulated that while the business had grown on the global front - GE Transportation has recently secured big contracts in Ukraine and India - there had been a downturn in demand in North America. 412,225 shares of the company traded hands, compared to its average volume of 967,086.
The deal caps a review of the transportation division by GE dating back to last year after a string of setbacks for the 126-year-old company.
Wabtec, also known as Westinghouse Air Brake Technologies Corp., services the passenger transit and freight rail industries.
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"Wabtec and GE Transportation are global industry leaders and we believe that together we have a unique opportunity to drive tremendous growth in 2019 and beyond as the industry continues to improve", Betler says.
That should include GE getting rid of at least $20 billion of assets through sales, spin-offs or other means.
The strategic merger is expected to be tax-free to shareholders of GE and Wabtec.
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GE has seen its stock price plummet in recent years, and the company's management has talked about options for restructuring.