Faiveley Transport Enters Into Exclusive Negotiations With Wabtec Corporation To Create a Global Leading Player In Railway Equipment

Faiveley Transport Enters Into Exclusive Negotiations With Wabtec Corporation To Create a Global Leading Player In Railway Equipment :Faiveley Transport has entered into exclusive negotiations with Wabtec Corporation after receiving a binding offer to acquire all Faiveley Transport shares, at a price of €100 per share, representing an enterprise value of approximately €1.7bn.

The proposed combination would create one of the largest railway equipment companies with combined revenues of approximately €4bn, and would enhance Faiveley Transport’s operations in the long term.

The Faiveley family would pursue its long term strategic involvement in the railway industry both as a prominent shareholder of Wabtec and as a representative on Wabtec’s Board of Directors.

Faiveley Transport top management would lead Wabtec’s global transit group (Wabtec’s largest group). Transit activities of the enlarged entity would generate revenues in excess of €2bn, representing twice the current size of Faiveley Transport. The enlarged Transit group would remain headquartered in Gennevilliers (France) and would operate globally under Faiveley Transport brand name.

Wabtec offers all shareholders of Faiveley Transport to purchase their shares for a price of €100 per share (after payment of the €0.90 per share annual dividend in October 2015). This price represents a 41% premium over Faiveley Transport spot share price as of July 24th, 2015.

Stéphane Rambaud-Measson, Chairman of the Management Board and Chief Executive Officer of Faiveley Transport, said: “The combination of our operations with Wabtec would be an excellent strategic move for Faiveley Transport. Our complementarity is remarkable, both in terms of product portfolios and geographies. This transaction would enable us to pursue our ambition to become a global leader in railway equipment and services in passenger transit. Faiveley Transport would double size with the contribution of Wabtec’s transit division, thus enlarging the French industrial footprint of the group. The strong commitment of the Faiveley family as long term shareholders is a testimony of the powerful industrial rationale of the proposed combination.”

Philippe Alfroid, Chairman of the Supervisory Board, said:“The Supervisory Board has approved, unanimously by those present, the decision to enter into exclusive negotiations with Wabtec. The contemplated transaction would allow Faiveley Transport to utilize its competencies within a larger group and accelerate its development worldwide in the long term.”

Raymond T. Betler, President and Chief Executive Officer of Wabtec Corporation, said:“Faiveley Transport is a reference in passenger transit products and services and we would be pleased to welcome the talented and highly skilled Faiveley Transport teams into our group. Faiveley Transport’s transit business would become the basis for our offerings in this sector and expand our reach in Europe and Asia-Pacific in particular. I would be delighted as well to have Stéphane on my side to lead Wabtec and as President and CEO of Wabtec Transit group, Wabtec’s largest group.”

Albert J. Neupaver, Executive Chairman of Wabtec Corporation, added: “We would be pleased to welcome the Faiveley family as a long-term Wabtec shareholder with representation on our Board of Directors.”

Details of the proposed transaction

§ The shares owned by the Faiveley Family, representing approximately 51% of the share capital of the company would be acquired by Wabtec for a consideration consisting of 25% of cash at a value of €100 per share, and 75% of Wabtec preferred shares, at an implied ratio of one Faiveley Transport share for 1.125 Wabtec ordinary shares (after payment of the €0.90 per Faiveley Transport share annual dividend in October 2015).

§ Wabtec would file a mandatory public tender offer on all remaining Faiveley Transport shares, in which shareholders would have the choice between:

o a cash tender offer at €100 per share; and

o an alternative Wabtec preferred shares offer, enabling them to tender their shares in exchange for Wabtec preferred shares, at an implied ratio of one Faiveley Transport share for 1.125 Wabtec ordinary shares, capped at 75% of shares constituting the free float.

§ The Faiveley family as well as shareholders who would chose to tender their shares in exchange for Wabtec shares would receive Wabtec preferred shares (16 Faiveley Transport shares for one Wabtec preferred share) with the following characteristics:

o Non-listed preferred share subject to transfer restrictions, automatically converted into ordinary Wabtec shares after a period of 3 years based on an exchange ratio of 18 Wabtec ordinary shares for one Wabtec preferred share;

o Nominal value of USD 1,764 per preferred share;

o Annual dividend paid to the preferred share owner equal to the maximum of (a) 1% of the nominal value, or (b) the ordinary dividend paid by Wabtec, after taking into account the exchange ratio between Wabtec’s ordinary shares and the preferred shares.

§ The cash offer represents a premium of 41% over Faiveley Transport closing share price on July 24th, 2015.

§ This combination project would create a global leading player in railway equipment:

o The combined group would generate approximately €4bn revenues;

o Thanks to the complementarity of Faiveley Transport and Wabtec’s operations, the group would benefit from a strengthened and well-balanced business portfolio, both in terms of products and services mix (c.45% of revenues in Freight, c.55% in Transit) and geographic mix (c.50% of revenues in North America, c.30% in Europe and c.20% in Asia-Pacific);

o The enlarged group would have a global reach, combining both companies’ best-in-class industrial and engineering capabilities;

o The combined entity would benefit from a solid capital structure and strong financial flexibility that would enable it to capture further growth opportunities.

§ The proposed transaction would complement Faiveley Transport operations. In particular, Wabtec has committed to the following:

o The enlarged €2bn global passenger transit activities of the group would be headquartered in Gennevilliers (France);

o Faiveley Transport would become the brand name of the group’s global passenger transit activities;

o Faiveley Transport’s Centers of Competencies (R&D and engineering departments) in France and in Europe will be core to the group’s development strategy;

o Wabtec intends to maintain the existing Faiveley Transport human resources policy in Europe for a period of at least 18 months after closing, in line with Faiveley Transport’s 2018 Strategic Plan presented in May 2015.

§ Faiveley Transport management would have a key role in the management leadership of the group:

o Stéphane Rambaud-Measson, Chairman of the Management Board and Chief Executive Officer of Faiveley Transport would become Executive Vice President of Wabtec Corporation, and President and CEO of the new Wabtec Transit group;

o Guillaume Bouhours, Chief Financial Officer of Faiveley Transport, would become CFO of the new Wabtec Transit division.

§ By significantly reinvesting in the enlarged group and remaining involved as a long term strategic shareholder, the Faiveley family confirms the strategic rationale of the combination between the two companies. The Faiveley family would own approximately 6% of the share capital, on an as-converted basis, of the group and be represented by two members at the Board of Directors of Wabtec (Philippe Alfroid, current Chairman of the Supervisory Board of Faiveley Transport, and Erwan Faiveley, Chief Executive Officer of FFP, holding company of the Faiveley Family).

§ The trading of Faiveley Transport shares on Euronext Paris has been halted this day and will resume at the opening of the market on July 28th, 2015.

§ The entering into exclusive negotiations has opened a “pre-offer period” regarding Faiveley Transport (pursuant to French stock exchange regulation). The Supervisory Board of Faiveley Transport has appointed Détroyat Associés as independent expert to prepare a fairness opinion regarding the envisaged mandatory tender offer, followed as the case may be by a mandatory squeeze-out.

§ Faiveley Transport will implement procedures related to the information and consultation (“info-consultation”) of employee representative bodies. This transaction is subject to clearance by relevant antitrust bodies.

§ Rothschild is acting as financial advisor and Darrois Villey Maillot Brochier and Wachtell Lipton Rosen & Katz as legal advisors to Faiveley Transport.

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