To Be Acquired by Wabtec for €100/shr in cash and stock; total deal valued around $1.8B
Wabtec has made an irrevocable offer to the owners of approximately 51% of Faiveley Transports shares for a purchase price of €100 per share, 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 per share or Wabtec preferred stock. The preferred stock portion of the consideration is subject to a cap of 75% of Faiveley Transports common shares. Wabtec intends to delist Faiveley Transport from Euronext after the tender offer if minority interests represent less than 5%. The total purchase price is about $1.8 billion, including assumed debt. Wabtec plans to fund the cash portion of the transaction with cash on hand, existing credit facilities and potentially other debt financing.
The strategic combination of Wabtec and Faiveley Transport will create one of the worlds largest public rail equipment companies, with revenues of about $4.5 billion and a presence in all key freight rail and passenger transit geographies worldwide. Wabtec expects to realize at least €40 million in annual pre-tax synergies from the combination, and the transaction is expected to be accretive to Wabtecs earnings per diluted share in 2016.
Albert J. Neupaver, Wabtecs executive chairman, said: Faiveley Transport is an excellent strategic fit, expanding our geographic presence considerably, broadening our product and service capabilities, and enhancing our technology and innovation initiatives, all of which will make us a more efficient global competitor. We are excited by the compelling opportunities and synergies created from the combination of two rail industry leaders with historic ties, a commitment to growth and efficiency, and a focus on technology, quality and customer service. We would be pleased to welcome the Faiveley family as a long-term Wabtec shareholder with representation on our Board of Directors.
Faiveley Transports headquarters in Gennevilliers, France will become Wabtecs 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 companys existing Centers of Competencies for engineering and research and development, in line with Faiveley Transports 2018 Strategic Plan presented in May 2015.