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Faiveley Transport Acquires Sab Wabco from Vestar Capital Partners to Create a World Leader in On-Board Railway Systems.

NEW YORK & PARIS -- Faiveley Group, Sagard and Vestar Capital Partners announced today that Faiveley Transport signed a share purchase agreement to acquire the entire share capital of Sab Wabco, a European leader in brake systems for the railway industry.

The enterprise value (before deduction of net debt) for the acquisition of Sab Wabco is EUR 310m (or $381m).

The acquisition of Sab Wabco and the refinancing of its existing bank debt will be financed by bank debt of up to EUR 230m underwritten by a pool of financial institutions led by Societe Generale and BNP Paribas, and by a capital increase amounting to EUR 100.4m reserved for Sagard and the management teams of Faiveley Transport and Sab Wabco.

The implied enterprise value of the combined entity (Faiveley Transport and Sab Wabco) amounts to EUR 516m and the implied equity value after the capital increase to EUR 286m.

The newly formed entity, controlled by Faiveley S.A., will become one of the world leaders in on-board railway systems with a broadened offer ranging from HVAC, electromechanics and electronics to brake systems, couplers and wheels. Synergies between the two companies should strengthen Faiveley Transport's growth potential and further increase its profitability.

For the year ended March 31st, 2004, the two companies had combined pro forma sales of EUR 581m(1), a pro forma operating profit of EUR 59m(1) and an operating margin of 10.2%. Faiveley Transport's net debt will amount up to EUR 230m after the acquisition, which will preserve its substantial operational investment capacity.

Faiveley S.A., the current holding company of Group Faiveley, will remain the majority shareholder of Faiveley Transport in shares and voting rights which will be split as follows: 61.7% for Faiveley S.A., 35.9% for Sagard and 2.4% for the management of Faiveley Transport and Sab Wabco. A shareholders' agreement will define the relationships between Faiveley S.A. and the other shareholders of Faiveley Transport. Its main terms will be made public upon the closing of the Sab Wabco acquisition and the Faiveley Transport capital increase.

Robert Joyeux, the current CEO of Faiveley Transport, will be in charge of the combined entity, with a management team combining managers from Faiveley Transport and Sab Wabco. Francois Faiveley, chairman of Faiveley S.A. said: "I am delighted with the acquisition of Sab Wabco, which enables us to form one of the world leaders in railway equipment. The brake activity of Sab Wabco perfectly complements the range of products offered by Faiveley Transport, which is already a leader in HVAC, electromechanics and on-board electronics. I am convinced that the quality and the motivation of the management will contribute to the successful integration of the two companies."

"We are very pleased to participate with the Faiveley Group in this new stage of development of its Transport division," declared Chris Spencer, the partner at Sagard in charge of the transaction. "This transaction reflects Sagard's core strategy, which is to act as the catalyst to major industrial projects supported by skilled management teams."

Robert Rosner, President of Vestar Capital Partners Europe said: "The merger of these two industry leaders is very powerful and has always been considered as the dream business combination." Mr Rosner added: "We congratulate Sab Wabco's senior management team for having delivered such outstanding performance over the years resulting in significant value creation for the company and its shareholders."

The Sab Wabco acquisition and the Faiveley Transport capital increase should be completed in November 2004. Nevertheless, these transactions remain subject to the agreement of the antitrust authorities and the absence of any material adverse change affecting Sab Wabco.

Rothschild advised both Faiveley and Sagard on this transaction and Credit Suisse First Boston advised Sab Wabco.

About Faiveley, Sab Wabco, Sagard and Vestar Capital Partners


The activities of the Faiveley Group can be broken down into two highly technological sectors:

--Railway: designing & manufacturing of railway equipments; and

--Plastics: injection of complex technical devices (ball-bearing cages, perfumery sticks, etc.)

Faiveley Transport is a wholly-owned subsidiary of Faiveley S.A., specializing in the designing and manufacturing of railway equipment, with four ranges of products: HVAC, electromechanics (doors, power collecting, etc.), electronics and customer services. For the year ended March 31st, 2004, Faiveley Transport had total revenues of EUR 253.2m, of which 36% was in France and 40% in the rest of Europe, and a 9.2% operating margin. The backlog represents more than 1.6x this year's sales.


Sab Wabco is a group specializing in the designing, manufacturing and marketing of brake systems, wheels and couplings for the railway industry. In 2003, Sab Wabco had a total turnover of EUR 325.2m, of which 14% was in France and 71% in the rest of Europe, and a 11% operating margin. The backlog represents more than 1x this year's sales.


Sagard is a European specialist in private equity created by the Power Corporation (Groupe Desmarais).

Based in Paris, Sagard targets mainly medium sized companies capable of becoming leaders in their market. It invests jointly along with ambitious and experienced management teams, in order to help them implement medium to long-term industrial projects.

During the first semester of 2004, Sagard acquired both AFE (a European specialist in plastics and cast steel) and Le Groupe Moniteur (a French leading media group dedicated to construction and public authorities) and took a participation in Vivarte (a major competitor in the specialized distribution market (clothing and footwear) in Europe).


Vestar Capital Partners is a leading investment firm specializing in management buyouts, recapitalizations and growth capital investments. Vestar's investment strategy is targeted towards middle-market companies in the US and Europe with valuations in the $200 million to $2 billion range.

Since the firm's founding in 1988, Vestar has completed over forty-five investments in companies with a total value exceeding $15 billion. These companies have varied in size and geography and span a broad range of industries.

Vestar Capital Partners acquired Sab Wabco in 2002. The acquisition represented the firm's second investment in the railway equipment supply industry, having previously led the management buyout of Westinghouse Air Brake Company which was subsequently listed on the New York Stock Exchange.

Vestar currently manages funds totaling approximately $4 billion and has offices in New York City, Denver, Boston, Paris, and Milan.

More information about Vestar is available at
(1) Pro forma financial data are based on accounting standards
 currently in force in both companies
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Publication:Business Wire
Geographic Code:4EUFR
Date:Oct 6, 2004
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