For example, GE Transportation is expected to deliver around 300 locomotives in 2018; that compares with an average of around 670 over the last decade.Wabtec's management certainly thinks it got a great deal.
Returns as of 07/30/2020.Founded in 1993 by brothers Tom and David Gardner, The Motley Fool helps millions of people attain financial freedom through our website, podcasts, books, newspaper column, radio show, and premium investing services. Find the latest dividend history for General Electric Company Common Stock (GE) at Nasdaq.com. Specifically, GE Transportation will be first distributed to GE shareholders in a "tax-free spin- or split-off; then immediately merged with Wabtec," according to the deal presentation. WAB Dividend History & Description — Wabtec Corp. Wabtec primarily serves the global freight rail and passenger transit industries. We’re deeply proud of GE employees around the world rising to the challenge.Accomplished leaders building GE’s legacy.Answers to popular and relevant inquiries.Access important shareholder information.Explore GE’s recent and historic SEC filings.Learn about governance at GE, including the latest Proxy Statement and information about the GE Board of Directors.Together with our customers, we’re proving that no one is ever limited to only affordable, reliable, or sustainable energy.Learn how we’re delivering on our priorities.At GE, we rise to the challenge of building a world that works. However, GE is pre-funding its pension plan to the tune of $6 billion in 2018 by borrowing the same amount.
In other words, in future years, earnings should rebound strongly -- and, all things being equal, the EV/EBITDA multiple will decline.Retains 49.9% of shares in new Wabtec.As it stands, GE expects $6 billion to $7 billion in industrial FCF in 2018, which is intended to fund a $4.2 billion dividend payment. If not, it would represent a missed opportunity to possibly bring in some more much-needed cash. Data source: Wabtec presentations.All told, it looks like a good deal for Wabtec.An analyst with a glass-half-full approach would see the deal as progress on GE's restructuring plans and note that the cash flow will give the company more leeway to restructure the power segment before a bounce-back in total FCF generation in 2019. It's too early to tell right now, but what's undeniable is that the GE-Wabtec deal marks progress on GE management's strategic aims, and that can't be seen as anything but a plus.Let's start by breaking out who will own what after the merger.
GE shareholders will directly own approximately 24.3% of Wabtec on a fully diluted basis and GE will own common stock and non-voting convertible preferred stock which together represent approximately a 24.9% economic interest in Wabtec on a fully diluted basis, up from the 9.9% stake that GE would have owned under the originally announced transaction terms. Meanwhile, the structure of the deal is a nice way to return capital to GE shareholders.Let's take a look at both sides of the story.Management has already told investors to expect earnings and, by implication, cash flow to be at the lower end of 2018 guidance -- its most recent guidance implies a $500 million cut in power segment profit, which will be hard to make up elsewhere.Since GE Transportation is only expected to start to rebound from a cyclical low in 2018, even the EV/EBITDA multiple for 2019 is still likely to reflect cyclically low earnings.
GE will not be filing form 8937 because the transaction has no impact on the tax basis in GE shares.
As you can see below, existing shareholders will be rewarded with stock, as well as future cash flow and dividends from the new Wabtec. So if you are a GE shareholder, you should have a keen interest in the rationale for the deal because you will be owning stock in Wabtec.`Receives 9.9% of shares in new Wabtec and $2.9 billion in cash.Second, it's worth noting that Wabtec is merging with GE Transportation at a cyclical low point. We’re continuing to do all we can to support our customers and employees during this unprecedented time.
If a shareowner receives cash in lieu of fractional shares, shareowner will receive a Form 1099-B.