Wabtec to Acquire Frauscher Sensor Technology Group
'This strategic acquisition enhances Wabtec's current Digital Intelligence portfolio, our opportunities in a high potential market, and aligns with our Company's long-term growth strategy,' said Wabtec President and CEO Rafael Santana. 'Frauscher has an industry leading portfolio that offers a rare combination of innovative technology, sustained growth, and strong and resilient profitability.'
Wabtec is acquiring Frauscher for an enterprise value of €675 million in cash. The acquisition is anticipated to provide immediate shareholder value with an accretive growth profile, accretive Adjusted EBIT margins, accretive Adjusted EPS in the first year of ownership, and accretive return on invested capital (ROIC) over time. The purchase price reflects an estimated multiple of 12.4x projected 2025 EBITDA adjusted for projected run-rate cost synergies which Wabtec expects to be realized over a three-year period. Frauscher is expected to generate approximately €145 million of revenue in 2025 and expected growth will exceed Wabtec's average growth over the next five years. The transaction is subject to customary closing conditions and regulatory approvals.
'Frauscher is a strong addition to the Digital Intelligence business, with a complementary product portfolio that supports our vision of maximizing the safety, efficiency, and capacity of the global rail network,' said Nalin Jain, President of Wabtec's Digital Intelligence Group. 'By combining our businesses, we will be able to deliver safety-critical insights through customized systems combining sensors with software and analytics, along with a comprehensive lifecycle services suite. Given Frauscher's significant presence in Europe and India, this acquisition will further strengthen our international growth strategy in these large markets.'
This strategic acquisition strengthens Wabtec's Digital Intelligence portfolio and further advances its penetration into the high growth railway signaling market. It also aligns with the Company's long-term vision of driving innovation, productivity, safety and reliability for its customers, while ensuring the integrity of mission critical assets, infrastructure, and supply chains on a global scale.
About Wabtec
Wabtec Corporation is revolutionizing the way the world moves for future generations. The Company is a leading global provider of equipment, systems, digital solutions and value-added services for the freight and transit rail industries, as well as the mining, marine and industrial markets. Wabtec has been a leader in the rail industry for 155 years and has a vision to achieve a sustainable rail system in the U.S. and worldwide. Visit Wabtec's website at http://www.wabteccorp.com.
About Frauscher
Frauscher Sensor Technology Group offers innovative solutions for the individual requirements of customers worldwide in the field of axle counting and wheel detection. In doing so, Frauscher strives to provide the best possible support to system integrators and railway operators throughout the life cycle of products and beyond, giving them access to the information they need. With a worldwide network of locations and partners, Frauscher also guarantees a strong supply chain and optimum customer support around the globe.
Forward Looking Statement
This press release contains forward-looking statements within the meaning of the U.S. securities laws, including statements regarding the expected benefits of the Frauscher Sensor Technology Group, the anticipated synergies of the transaction, the expected impact on Wabtec's operational and financial performance, (including business growth opportunities and TAM), and certain projected financial results of Frauscher Sensor Technology Group. These statements and all statements other than historical facts constitute forward-looking statements concerning future circumstances and results and are sometimes identified by the words 'anticipate,' 'estimate,' 'expect,' 'outlook,' 'position,' 'project,' 'recur,' 'strategy,' and 'will' or other similar words or expressions. Forward-looking statements are based upon current plans, assumptions, estimates and expectations and are subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied. For more information on these risks, please refer to Wabtec's filings with the SEC. Important factors that could cause actual results to differ materially from such plans, estimates or expectations include, among others, (1) unexpected costs, charges or expenses resulting from the transaction; (2) uncertainty of the expected financial performance of Frauscher Sensor Technology Group and the combined company following completion of the transaction; (3) risks associated with the integration of Frauscher Sensor Technology Group and the potential for failure to realize the anticipated benefits and synergies of the transaction; (4) the ability of the combined company to implement its business strategy; (5) inability to retain key personnel; (6) changes in general economic and/or industry specific conditions; and (7) other risk factors as detailed from time to time in Wabtec's reports filed with the Securities and Exchange Commission. The foregoing list of important factors is not exclusive.
This press release also contains certain non-GAAP measures. Non-GAAP measures should not be considered as a substitute for items calculated in accordance with GAAP, as they are subject to inherent material limitations.
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