GE jumps to three-month highs as analysts praise Wabtec deal

GE Transportation's locomotive business is being merged with Wabtec's component business

GE Transportation's locomotive business is being merged with Wabtec's component business

General Electric Co confirmed on Monday it was unloading the bulk of its transportation business which makes train engines to Wabtec Corp, a USA manufacturer of equipment for the rail industry, in a deal valued at about $11.1 billion. Over the last few years, GE has seemingly adopted many strategies of retaining the profitable brands and deleting the unprofitable ones through its pruning portfolio approach.

According to the announcement, Wabtec and GE Transportation will be combined into a wholly owned subsidiary of Wabtec.

General Electric Company shares were trading at $15.24 per share on Monday afternoon, up $0.27 (+1.80%). That was in line with April reports saying GE might spin off its rail unit through a "hybrid deal" that avoids a big tax bill. But first, it's interesting to me that despite GE and its investors ending up with a slight majority of the resulting transportation giant, the surviving entity seemingly will be called Wabtec. General Electric did something similar in forging Baker Hughes, a GE Co. "There has been a relationship between (us) that goes back decades", he said.

The resulting company will have approximately Dollars 8 billion in revenues, the companies said. "For a whole host of reasons, the stars kind of lined up this time, and it presented an opportunity for us to actually get it done", Belter told Reuters.

Wabtec Chairman Albert J. Neupaver was reappointed as executive chairman of the merged company. The transaction is expected to be tax free to the companies´ respective shareholders. GE Transportation President and CEO Rafael Santana will run the freight division.

Marketwatch has the details on GE's deal. Flannery is considering sales, spinoffs and even a broader breakup of GE's core aviation, power and health businesses. The Freight segment manufactures and services components for new and existing locomotive and freight cars; supplies railway electronics and positive train control equipment; offers signal design and engineering services; builds switcher locomotives; rebuilds freight locomotives; and provides heat exchangers and cooling systems for rail and other industrial markets.

Share price of GE stock lost close to half if overall value over the last 12 months, and the conglomerate has worked with Trian Fund Management an activist shareholder and member of the board to turn business around.