Strategic Acquisition Will Help Sustain Long Term EPS Growth
Financial Partnership with Carlyle Will Foster Genesee's
Profitability and Global Growth
WASHINGTON--(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 Operations
GWI'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 Timing
RailAmerica'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 Group
The 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 RailAmerica
RailAmerica, 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.
Media:
The Carlyle Group
Chris Ullman,
+1-202-729-5450
Chris.ullman@carlyle.com
or
Genesee
& Wyoming Inc.
Michael Williams, +1-203-413-2116
mwilliams@gwrr.com
Source: The Carlyle Group L.P.
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