NEW
YORK (AP) — General Electric will tie its train engine division to the
railroad equipment maker Wabtec in deal worth about $11 billion as GE
CEO John Flannery continues to break off parts of the conglomerate.
Wabtec CEO Raymond Betler will lead the combined company and its chairman, Albert Neupaver, will be executive chairman.
Under
the deal announced Monday and approved by the boards of both companies,
General Electric Co. will get $2.9 billion in cash. The deal is
expected to close early next year.
GE
plans to split-off the company after it closes the deal, essentially
giving Wabtec shareholders ownership, with 49.9 percent of the new
company. GE shareholders will hold a 40.2 percent stake and GE will own
9.9 percent.
The combined company will have more than 23,000 locomotives globally.
Flannery
took over at GE just about a year ago and has vowed to accelerate the
company's transformation from a sprawling conglomerate. Flannery, who
headed GE's health care unit, is focusing on health, aviation and
energy.
Earlier
this year after GE's surprise charge of $15 billion to make up for the
miscalculations of an insurance subsidiary, Flannery said, "All options
on the table, no sacred cows."
Flannery
plans to shed business units worth more than $20 billion in the near
term, and Wall Street appeared heartened by the prospect of partially
calving off the rail business.
Shares of GE jumped more than 2 percent at the opening bell Monday.
Wabtec is based in Wilmerding, outside of Pittsburgh. GE is based in Boston.
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