Wabtec to Acquire Dellner Couplers

Rhea-AI Summary

Wabtec (NYSE: WAB) has announced a definitive agreement to acquire Dellner Couplers, a global leader in train connection systems, for $960 million in cash. The Sweden-based company brings 84 years of expertise in safety-critical train connection systems with a global installed base of approximately 100,000 couplers and 12,500 gangways.

The acquisition will be financed through cash on hand and short-term debt, with expected revenue of $250 million in 2025. Projected run-rate cost synergies of $22 million are anticipated over three years. The purchase price represents a 12.5x multiple of projected 2025 EBITDA.

Dellner Couplers operates in 13 countries, serving over 200 customers with production, assembly, and aftermarket services. The transaction is expected to be accretive to adjusted EBIT margins, EPS in the first year, and ROIC over time.

Positive

• Immediate accretion to EBIT margins and EPS in first year
• Expected $22 million in cost synergies over 3 years
• Projected $250 million revenue contribution by 2025
• Large installed base of 100,000 couplers generating recurring revenue
• Geographic expansion with presence in 13 countries
• Strengthens high-margin aftermarket service capabilities

Negative

• Significant debt financing required for $960 million purchase
• High acquisition multiple at 12.5x 2025 EBITDA

Insights

Financial Analyst

Wabtec's $960 million acquisition of Dellner Couplers represents a strategic move to strengthen its transit portfolio with high-margin recurring revenue streams. The transaction metrics reveal important financial considerations: the 12.5x multiple of 2025 projected EBITDA (adjusted for synergies) appears reasonable given Dellner's strong market position and growth profile.

The acquisition economics look compelling - management expects $22 million in cost synergies over three years, immediate EPS accretion, and improved EBIT margins. Dellner's projected $250 million 2025 revenue contribution (~2% of Wabtec's total) with above-company-average growth trajectory for the next five years positions this as a growth-enhancing acquisition.

The financing structure utilizing cash and short-term debt maintains financial flexibility, though increased leverage warrants monitoring. The acquisition's true value lies in Dellner's aftermarket services business tied to its installed base of 100,000 couplers and 12,500 gangways. This creates resilient, high-margin recurring revenue that should provide consistent cash flow through economic cycles.

Strategically, this enhances Wabtec's competitive position against major transit competitors like Alstom and Siemens by creating a more comprehensive product suite for transit operators. The transaction demonstrates Wabtec's continued disciplined expansion in transit systems while maintaining its commitment to margin-accretive growth.

Industrial Engineering Expert

This acquisition significantly enhances Wabtec's technical capabilities in safety-critical train connection systems. Dellner's 84-year engineering heritage has produced sophisticated coupler technologies that maintain structural integrity during train operations and collisions - absolutely critical for passenger safety.

The integration presents substantial engineering synergies: Wabtec can now offer comprehensive train control and connection systems as an integrated solution rather than components sourced from multiple suppliers. This systems-level integration capability represents a meaningful competitive advantage in complex transit procurement processes.

Dellner's 100,000 installed couplers create an excellent installed base for Wabtec to leverage its digital monitoring capabilities, potentially enabling predictive maintenance solutions that prevent costly service disruptions. The combined engineering teams can develop next-generation connection systems incorporating advanced materials and digital technologies.

From a manufacturing perspective, Dellner's production facilities across 13 countries complement Wabtec's global footprint, providing manufacturing resilience and proximity to key markets. While supply chain integration will present challenges, the $22 million synergy target appears achievable through procurement optimization and manufacturing rationalization without compromising quality standards essential for safety-critical components.

This acquisition positions Wabtec to capture increased market share in the growing urban transit sector where integrated systems providers have competitive advantages over component suppliers.

PITTSBURGH--(BUSINESS WIRE)-- Wabtec Corporation (NYSE: WAB) announced today a definitive agreement to acquire Dellner Couplers, a global leader in highly engineered safety-critical train connection systems and services for passenger rail rolling stock. The acquisition brings highly attractive and complementary technologies to Wabtec and positions the Company for accelerated, profitable growth, while strengthening its portfolio of mission critical passenger rail systems.

“Dellner Couplers provides significant synergies by complementing our core Transit systems portfolio, servicing a joint customer base, and leveraging our strong service capabilities,” said Rafael Santana, President and CEO of Wabtec. “This acquisition aligns very well with our stated growth strategies to accelerate the innovation of scalable technologies, expand high margin recurring revenues, and to drive improved operational performance.”

Sweden-based Dellner Couplers brings an 84-year legacy of innovation in train connection systems, which positioned the company as an industry leader in manufacturing and servicing of couplers for the transit rail industry. It has a global installed base of approximately 100,000 couplers and 12,500 gangways. Dellner Couplers provides an extensive offering in train connection systems, with production, assembly and aftermarket services facilities in 13 countries serving over 200 customers.

“This acquisition will significantly enhance the capabilities of our Transit business, allowing us to provide an attractive offering for customers and opening further opportunities for expansion,” said Pascal Schweitzer, President of Wabtec Transit. “The strength of Dellner Couplers’ portfolio of products and services, along with the management team’s track record of delivering industry-leading financial results will accelerate our long-term profitable growth strategy.”

Wabtec is acquiring Dellner Couplers for $960 million in cash, financed through cash on hand and short-term debt. 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 12.5x projected 2025 EBITDA adjusted for transaction costs and projected run-rate cost synergies of $22 million which we expect to be realized over a three-year period. Dellner Couplers is expected to generate approximately $250 million of revenue in 2025 and expected growth that will exceed the Company’s average growth over the next five years. The transaction is subject to customary closing conditions and regulatory approvals.

This strategic acquisition strengthens Wabtec's Transit product and services portfolio serving a stable and growing underlying passenger rail market that is driven by sustainable megatrends. It builds upon the Company’s leadership position in this large, expanding, and resilient addressable market. The addition of Dellner Couplers aligns with the Company's long-term vision of driving innovation, productivity, safety and reliability for passenger rail on a global scale.

About Wabtec Corporation

Wabtec Corporation (NYSE: WAB) is focused on creating transportation solutions that move and improve the world. 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 over 150 years and has a vision to achieve a zero-emission rail system in the U.S. and worldwide. Visit Wabtec’s website at www.wabteccorp.com.

About Dellner Couplers

Dellner Couplers is a global market leader focused on couplers and gangways for passenger rail rolling stock, with an over 80 year-long history of industry leadership. The company serves various major rolling stock OEMs, operators, and independent maintenance and repair providers worldwide. The company employs over 1,200 people throughout 17 offices worldwide and serves over 200 customers. Visit Dellner Coupler’s website at www.Dellner Couplers.com.

Information about non-GAAP Financial Information and Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the U.S. securities laws, including statements regarding the expected benefits of the Dellner Couplers acquisition, including anticipated synergies and the expected impact on Wabtec's operational and financial performance. These statements, the expected timing of the transaction, projected financial results of Dellner Couplers and other statements that are not historical facts constitute forward-looking statements concerning future circumstances and results. Forward-looking statements are sometimes identified by the words “anticipate,” “estimate,” “expect,” “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 Securities and Exchange Commission (SEC). Important factors that could cause actual results to differ materially from such plans, estimates or expectations include, among others, (1) the risk that the proposed transaction may not be completed in the time frame expected by Wabtec or at all; (2) uncertainties relating to regulatory approvals relating to the acquisition, (3) the potential for unexpected costs, charges or expenses resulting from the proposed transaction; (4) uncertainty of the expected financial performance of Dellner Couplers and the combined company following completion of the proposed transaction; (5) risks associated with the integration of Dellner Couplers and the potential for failure to realize the anticipated benefits and synergies of the proposed transaction; (6) the ability of the combined company to implement its business strategy; (7) inability to retain key personnel; (8) changes in general economic and/or industry specific conditions; and (9) other risk factors as detailed from time to time in Wabtec’s reports filed with the SEC. The foregoing list of important factors is not exclusive. Any forward-looking statements speak only as of the date of this press release. Wabtec does not undertake any obligation to update any forward-looking statements, whether as a result of new information or development, future events or otherwise, except as required by law.

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.

View source version on businesswire.com: https://www.businesswire.com/news/home/20250317325700/en/

Media

Tim Bader

682-319-7925 or Tim.Bader@wabtec.com

Investors

Kyra Yates

817-349-2735 or Kyra.Yates@wabtec.com

Source: Wabtec Corporation

FAQ

How much is Wabtec (WAB) paying for Dellner Couplers acquisition?

Wabtec is acquiring Dellner Couplers for $960 million in cash, financed through cash on hand and short-term debt.

What are the expected cost synergies from WAB's Dellner Couplers acquisition?

Wabtec expects to realize run-rate cost synergies of $22 million over a three-year period.

What is Dellner Couplers' projected revenue for 2025 under WAB ownership?

Dellner Couplers is expected to generate approximately $250 million of revenue in 2025.

How will the Dellner acquisition impact WAB's financial performance?

The acquisition is expected to be accretive to Adjusted EBIT margins, Adjusted EPS in the first year, and ROIC over time.

What is the size of Dellner Couplers' current installed base under WAB acquisition?

Dellner Couplers has a global installed base of approximately 100,000 couplers and 12,500 gangways.