Zinger Key Points
- Wabtec acquires Evident's Inspection Technologies for $1.78B, doubling its digital market reach to $16B.
- Deal expected to close mid-2025, delivering $25M in synergies, revenue growth, and accretive Adjusted EPS in year one.
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Westinghouse Air Brake Technologies Corporation WAB shares were trading higher premarket on Tuesday after the company inked a deal to acquire Evident’s Inspection Technologies division for $1.78 billion (around $1.68 billion after-tax benefits).
Notably, Evident’s Inspection Technologies division was previously part of Olympus Corporation's Scientific Solutions Division.
The purchase price reflects a 12.0x multiple of projected 2025 EBITDA, adjusted for transaction costs, tax benefits, and anticipated cost synergies of $25 million.
The transaction is subject to customary closing conditions and regulatory approvals, with the acquisition of Inspection Technologies expected to be completed by mid-2025.
Synergies: The acquisition is expected to deliver immediate shareholder value, driven by high single-digit revenue growth, accretive Adjusted EBIT margins and improved return on invested capital (ROIC) over time.
The company also projects the deal slightly boosting Adjusted EPS in the first year.
This acquisition positions Wabtec for accelerated growth and strengthens its focus on improving customer productivity, reliability, and safety.
This acquisition is anticipated to expand Wabtec’s Digital Intelligence business, doubling its total addressable market from around $8 billion to $16 billion.
The buyout enhances the company's capacity to offer innovative solutions to a wider customer base.
Notably, the company had been on an acquisition spree lately.
Last month, Wabtec acquired Bloom Engineering, enhancing its portfolio with advanced burners, combustion systems, and services for industrial and process heating applications.
In Novemeber, Wabtec disclosed a strategic acquisitions of Fanox and Kompozitum for a combined cost of $110 million.
As of September 30, 2024, Wabtec’s cash, cash equivalents and restricted cash stood at $410 million.
Investors can gain exposure to the stock via iShares Environmental Infrastructure and Industrials ETF EFRA and Janus Henderson U.S. Sustainable Equity ETF SSPX.
Price Action: WAB shares are up 0.60% at $193.00 premarket at the last check Tuesday.
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