Westinghouse Air Brake Technologies (WAB) M&A Announcement summary

Deal rationale and strategic fit

• Acquisition of Evident's Inspection Technologies Division accelerates growth in digital intelligence, expands offerings in rail, mining, and industrial sectors, and doubles the total addressable market from $8B to $16B.

• Strengthens portfolio with advanced diagnostic and inspection technologies, enhancing productivity, reliability, and safety for mission-critical assets.

• Supports growth into high-growth, high-margin end markets and recurring revenue streams.

• Complements existing offerings, leverages shared technologies for cross-selling, and aligns with long-term innovation strategy.

• Addresses long-term trends such as aging infrastructure, increased safety requirements, and regulatory tightening.

Financial terms and conditions

• Purchase price is $1.78 billion in cash, subject to customary adjustments, with an effective price of ~$1.68 billion after tax benefits.

• Financed with cash on hand, credit revolver, and a term note; net leverage ratio expected at ~2.5x at closing, within target range.

• Purchase multiple is 12x projected 2025 adjusted EBITDA, factoring in $95 million in tax benefits and $25 million in expected cost synergies.

• Inspection Technologies expected to achieve $433 million in 2024 revenue and $112 million EBITDA (25.9% margin).

• Projected to be immediately accretive to growth profile, adjusted EBIT %, and slightly accretive to adjusted EPS in year one.

Synergies and expected cost savings

• $25 million in run-rate cost synergies targeted over three years, with $5 million in costs to achieve.

• Revenue synergies are anticipated but not included in the investment profile, representing potential upside.

• Integration will leverage software development, engineering, and technical expertise for superior solutions and profit growth.