(Reuters) - General Electric Co GE.N is nearing a deal to merge its transportation business, which manufactures train engines, with Wabtec Corp WAB.N, a U.S. maker of equipment for the rail industry, two people familiar with the matter said on Sunday.

FILE PHOTO: The logo of General Electric Co. is pictured at the Global Operations Center in San Pedro Garza Garcia, neighbouring Monterrey, Mexico, May 12, 2017. REUTERS/Daniel Becerril

A deal valuing the combined business at more than $20 billion could be announced as early as this week, the sources said, asking not to be identified because the negotiations are confidential.

It would be the biggest deal thus far to be inked by GE Chief Executive Officer John Flannery, who took over last August with a mandate to slash costs and boost the U.S. industrial conglomerate’s plummeting stock price.

There is always a possibility that the deal talks, which center on using a tax-efficient structure called a Reverse Morris Trust, could collapse at the last minute, the sources cautioned.

GE and Wabtec did not immediately respond to requests for comment.

Flannery told GE’s annual shareholder meeting last month that the company is “keenly aware of the pain” caused by its poor performance and dividend cut last year. Executives are trying to turn around the ailing power and oil and gas businesses, he told shareholders, adding that there is evidence of “green shoots” of improvement.

GE has taken several actions to prune its portfolio over the years, shedding plastics, NBCUniversal and most of its GE Capital business. It also combined its oilfield services business with Baker Hughes BHGE.N.

GE’s transportation business, which generated revenue of $4.7 billion, manufactures freight and passenger trains, marine diesel engines and mining equipment, among other products.

Wabtec, which has a market capitalization of $9.2 billion, manufactures equipment for locomotives, freight cars, and passenger transit vehicles.

Following a board of director shake-up, Flannery has pledged to cut $2 billion in cost for 2018 and to slash the company’s once-coveted dividend in half.

GE’s stock has lost about half its value in the last year, and the company has been working with activist hedge fund Trian Fund Management LP, which sits on its board of directors, to turn the business around.

A Reverse Morris Trust transaction allows a company to avoid a big tax bill by spinning off a unit that it wants to divest and simultaneously merging it with another company.