GE sells off its rail unit for $11B as it looks to fund a revamp

GE sells off their struggling rail unit to Wabtec as new CEO John Flannery trims the fat in a company revamp.


May 22, 2018

General Electric has agreed to sell its century-old railroad business to Wabtec for around $11B.

According to Axios, GE will receive $2B in cash and a 9.9% stake in the combined company, while shareholders will receive a 40.2% stake.

The Wall Street Journal reports that GE is currently in a major slump, with their stock down nearly 50% in the past year. But their new CEO, John Flannery, has promised a major “revamp” since taking the helm in August, and this is his first move in a major makeover.

Flannery’s comin’ in hot

In October, Flannery said there were “no sacred cows.”

AKA, he’s going to mercilessly cut business units that aren’t pulling their weight (GE’s freight locomotives division profits dropped 23% in 2017), so that the remaining divisions don’t have to fight for company resources.

He also pledged to sell at least $20B in assets and refocus the Boston-based manufacturer on key markets like aviation, healthcare, and energy.

And there’s gonna be more where that came from

The company is simultaneously in the midst of a strategic review that could result in other units being split or slashed — and lead to a breakup of the conglomerate entirely.

In the meantime, Flannery has promised to update investors by the end of June with a full plan for GE’s key markets, as he aims to make the company a lean, mean, dividend-producing machine.

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