Why Shares of Wabtec Derailed in August

Shares of Wabtec (NYSE: WAB) lost 10.9% in August, according to data provided by S&P Global Market Intelligence, as the rail equipment manufacturer took a short-term hit as it works to simplify its structure following a complex merger. Most of the losses occurred early in the month, with Wabtec shares down more than 20% for the month at one point before gradually clawing back some of the decline.

Wabtec, short for Westinghouse Air Brake Technologies, is in the process of digesting its merger with the locomotive and rail business of General Electric. The deal gave Wabtec considerably more size and scale, but it did create some overhangs for the stock.

Terms of the transaction initially called for GE shareholders to receive 40.2% of Wabtec, and for GE to retain a 9.9% stake in the combination along with receiving $2.9 billion in cash. It was always assumed GE would look to sell the shares, and the company did just that in a series of transactions, including a sale of 20,485,156 shares announced Aug. 9.

Source Fool.com