The Carlyle Group announced today that it has agreed to invest up to $800 million in Genesee & Wyoming, an operator of short line and regional freight railroads, which will enable Genesee & Wyoming to acquire RailAmerica, a portfolio company of Fortress Investment Group, for an all cash purchase price of $2 billion. Genesee & Wyoming is an experienced acquirer of short line railroads, having integrated 65 railroads through 36 acquisitions since 1985. The transaction is expected to close in the fourth quarter of 2012.
Genesee & Wyoming owns and operates short line and regional freight railroads and provides railcar switching services in the United States, Australia, Canada, the Netherlands and Belgium. 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. The company provides rail service at 17 ports in North America and Europe and performs contract coal loading and railcar switching for industrial customers. Genesee & Wyoming is headquartered in Greenwich, CT (www.gwrr.com).
RailAmerica 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. The company is based in Jacksonville, FL (www.railamerica.com).
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 and doubles North American revenue to approximately $1.1 billion. 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).
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 Carlyle Group invests in buyouts, growth capital, real estate and leveraged finance in Africa, Asia, Australia, Europe, North America and South America focusing on aerospace & defense, automotive & transportation, consumer & retail, energy & power, financial services, healthcare, industrial, infrastructure, technology & business services and telecommunications & media. The firm is based in Washington, DC (www.carlyle.com).
“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,” said Greg Ledford, Carlyle Managing Director and Head of the Transportation and Industrial team.
