Freightliner’s parent company, American group Genesee & Wyoming, is to be acquired by affiliates of Brookfield Infrastructure and GIC in a transaction valued at approximately $8.4 billion.
G&W owns a portfolio of 120 short line railroads, predominantly in North America, with operations in Europe and Australia. Through its subsidiaries worldwide, the business provides transportation infrastructure services over more than 26,000km of track, providing access to its well-diversified customer base.
The transaction is expected to close by year end or early 2020 and is subject to customary closing conditions, including approval by G&W stockholders holding 66 2/3 per cent of the outstanding common stock, required regulatory approvals that include approval by the Committee on Foreign Investment in the United States, the U.S. Surface Transportation Board, and certain competition and antitrust approvals.
Brookfield Infrastructure Partners, based in Toronto, Canada, is a multinational group that specialises in owning and operating infrastructure assets, from toll roads in Brazil to gas storage facilities in the USA. It owns Arc Infrastructure, which has a lease until 2049 on 5,500km of rail infrastructure throughout the southern half of Western Australia.
Global investment firm GIC was established in 1981 to manage Singapore’s foreign reserves. Its primary strategy is to invest directly in operating assets with a high degree of cash flow visibility and which provide a hedge against inflation.
Jack Hellmann, G&W chairman and CEO said: “We believe this transaction is an excellent outcome for all G&W stakeholders. For our current stockholders, the sale price realizes significant value and represents a 39.5% premium to our March 8th share price. And for long-term investors who have owned our shares for the past two decades, the sale price represents a return of more than 5,400%.
“The long-term investment horizon of Brookfield Infrastructure and GIC, as seasoned infrastructure investors, is perfectly aligned with the long lives of G&W railroad assets, which are integral to the local economies that we serve in North America and around the world. They are also fully supportive of our business plan, which will continue to be focused on safety, customer service, and growing our footprint to provide more opportunity for our people.
“We also expect this transaction will allow us to further enhance our business as we benefit from Brookfield Infrastructure/GIC’s expertise in real estate and technology, as well as relationships with their rail-centric/complementary portfolio companies.”