Akita Matsui Trading Says General Electric Shares Rise on Wabtec Merger Deal

TOKYO, May 22, 2018 /PRNewswire/ - Akita Matsui Trading has commented on the increase share price of General Electric as the company's stock rose 2 percent in afternoon trading on Monday ‎after a report said the industrial conglomerate has inked an agreement to ‎merge its struggling transportation business with Wabtec Corp.‎

In a deal valued at $11.1 billion. General Electric will receive up to $3 billion ‎in cash at the deal's closing, expected in the first three months of 2019. In addition, GE and ‎its shareholders will take a 50.1% ownership interest in the combined ‎company. ‎

Max Harrington, Head of Corporate Equities at Akita Matsui Trading, added that the deal "allows‎ GE Chief Executive Officer John Flannery to take a step toward fulfilling his long-frustrated mandate to cut costs by $2 billion and to slash the company's once-coveted dividend in half."

Researchers at Akita Matsui Trading highlighted that the deal makes the railroad equipment maker a Fortune 500 firm, as well as a global rail ‎equipment provider with more than 23,000 locomotives globally across over 50 countries. ‎

GE's stock has lost about half its value over the past 52 weeks, battered for months with no signs of relief coming, caused by the company's poor performance and dividend cut.

Edward Cohn, Director of Investor Services at Akita Matsui Trading, said in a telephone interview, ‎‎"The Wabtec-GE deal is certainly a positive because it is a takeover corporate action  that would boost the ‎embattled industrial conglomerate's plummeting stock price."

A combined company, they said, is expected to see its profits surge from about ‎‎$700 million in 2018 to nearly $1 billion next year.‎ The two companies also contend that the Transportation business is ‎changing, with new competitors finding ways to enter the sector.

General Electric and Wabtec also said the merged company — which would ‎keep the GE Transportation name and be run by Wabtec CEO Raymond Betler ‎‎— would captue substantial cost synergies of $250 million and a net resent ‎value of over $1.0 billion in tax benefits.‎

SOURCE Akita Matsui Trading