The Carlyle Group to Invest in Genesee & Wyoming, Enabling Genesee’s Acquisition of RailAmerica, Inc. for $2 Billion
July 23 2012 - 6:43AM
Business Wire
Global alternative asset manager The Carlyle Group (NASDAQ: CG)
announced today that it has agreed to invest up to $800 million in
Genesee & Wyoming Inc. (GWI) (NYSE: GWR), which will enable
Genesee & Wyoming to acquire RailAmerica, Inc. (NYSE: RA) for
an all cash purchase price of $2 billion ($27.50 per share). Equity
for the investment will come from Carlyle Partners V, a $13.7
billion U.S. buyout fund. Financing will be provided by Bank of
America Merrill Lynch. The transaction is subject to customary
closing conditions and regulatory approval and is expected to close
in the fourth quarter of 2012.
Greg Ledford, Carlyle Managing Director and Head of the
Transportation and Industrial team, said, “We believe this
partnership offers strategic benefits and will create significant
operational synergies. Carlyle’s industry expertise and global
network will help surface acquisition and growth opportunities that
will strengthen GWI’s long-term profitability. We look forward to
partnering with Jack and his team as we capitalize on these high
quality assets and the favorable dynamics of the domestic and
global rail industry.”
Jack Hellmann, President and CEO of GWI, said, “This strategic
acquisition will create significant shareholder value. Based on our
new partnership with Carlyle and the number of additional rail
opportunities that we see worldwide, we remain confident in our
ability to execute our acquisition and investment strategy to
sustain our long term EPS growth. Expanding our footprint provides
us with strong leverage to the eventual recovery of the U.S.
economy and creates a powerful platform for future domestic and
global industrial development. The combination strengthens our
ability to offer local, flexible, responsive operations with
outstanding customer service.”
Overview of Combined
OperationsGWI’s acquisition of RailAmerica will combine the
two largest short line and regional rail operators in North
America. The transaction is transformational for GWI’s North
American operations, as GWI will now operate 108 railroads over
more than 12,000 track miles. The transaction increases GWI’s total
revenues by nearly two-thirds to approximately $1.4 billion (2011)
and doubles North American revenue to approximately $1.1 billion
(2011). Following the transaction, GWI will have 111 railroads (108
in North America), 15,120 miles of track (12,300 in North America),
1.9 million carloads (1.7 million in North America), 1,000
locomotives (900 in North America) and 4,300 employees (3,900 in
North America).
The transaction significantly increases GWI’s customer and
commodity diversification. In 2011, no single customer would have
represented more than 3% of pro forma revenues, and no single
commodity group would have represented more than 13% of pro forma
freight revenues. On a geographic basis, GWI’s footprint of
railroads will grow from 24 U.S. States to 37 U.S. States, while
the United States overall will represent approximately 70% of GWI’s
pro forma revenue, with Australia at 20%, Canada at 10% and Europe
at less than 1%. Following the transaction, GWI expects to
originate or terminate more than 4% of carload traffic in the
United States, with volumes well balanced across all of the Class I
carriers.
GWI plans to integrate RailAmerica’s 45 railroads into GWI’s
eight existing North American Regions and to create two new
regions, headquartered in Michigan and Texas, respectively.
Centralized administrative functions, including accounting,
information technology, human resources, operations support,
customer service and others will continue to be provided from
offices in both Jacksonville, FL and Rochester, NY, with GWI’s
corporate headquarters remaining in Connecticut.
GWI is an experienced acquirer of short line railroads, having
integrated 65 railroads through 36 acquisitions since 1985. The
operational integration of RailAmerica will be led by GWI’s current
Chief Operating Officer, Jim Benz, who will manage the integration
until its completion, postponing his previously announced
retirement. Upon Mr. Benz assuming his integration
responsibilities, David A. Brown will succeed Mr. Benz as Chief
Operating Officer of GWI.
Expected TimingRailAmerica’s
majority stockholder, RR Acquisition Holding LLC, controlled by
Fortress Investment Group, executed a written consent adopting the
merger agreement. No further approval of the stockholders of
RailAmerica is required to adopt the merger agreement. However,
until the 30th day following the execution of the merger agreement,
RailAmerica may terminate the merger agreement to accept a superior
proposal, subject to payment to GWI of a termination fee of $49
million.
* * * * *
About The Carlyle GroupThe Carlyle Group is a global
alternative asset manager with $159 billion of assets under
management in 94 active funds and 63 fund of funds vehicles as of
March 31, 2012. Carlyle invests across four segments – Corporate
Private Equity, Real Assets, Global Market Strategies and Fund of
Funds Solutions – in Africa, Asia, Australia, Europe, the Middle
East, North America and South America. Carlyle has developed
expertise in various industries, including: aerospace, defense
& government services, consumer & retail, energy, financial
services, healthcare, industrial, technology & business
services, telecommunications & media and transportation. The
Carlyle Group employs more than 1,300 people in 32 offices across
six continents. www.carlyle.com.
About Genesee & Wyoming Inc.GWI owns and operates
short line and regional freight railroads and provides railcar
switching services in the United States, Australia, Canada, the
Netherlands and Belgium. In addition, we operate the Tarcoola to
Darwin rail line, which links the Port of Darwin with the
Australian interstate rail network in South Australia. Operations
currently include 66 railroads organized in 10 regions, with more
than 7,600 miles of owned and leased track and approximately 1,400
additional miles under track access arrangements. We provide rail
service at 17 ports in North America and Europe and perform
contract coal loading and railcar switching for industrial
customers.
About RailAmericaRailAmerica, Inc. owns and operates
short-line and regional freight railroads in North America,
operating a portfolio of 45 individual railroads with approximately
7,500 miles of track in 28 U.S. states and three Canadian
provinces.
Carlyle (NASDAQ:CG)
Historical Stock Chart
From Jun 2024 to Jul 2024
Carlyle (NASDAQ:CG)
Historical Stock Chart
From Jul 2023 to Jul 2024