G&W: SOLD! To Brookfield, G.I.C. For $8.4 Billion

An Agreement for G&W to be Taken Private by Brookfield Infrastructure Partners and Singapore Sovereign Wealth Fund GIC Ends Global Heavyweight "Auction" Playing Since March.

01 July, Darien CT – G&W owns or leases 120 freight railroads organized in eight operating regions. The company’s six North American regions include 114 regionals and short lines operating in 41 states and four Canadian provinces. The Australia Region includes the 1,400-mile Tarcoola – Darwin rail line, and the UK/Europe Region includes the United Kingdom’s largest rail maritime intermodal operator and second-largest freight-rail provider { Progressive Railroading, 01.July.2019}.

Brookfield Infrastructure Partners controls $65 Billion of transportation, energy, utility, and data infrastructure assets worldwide, including 10,300 km of railroads, and 37 port terminal assets {brookfield.com}. G&W will be their first North American rail asset, and may integrate with their existing NA port assets. G&W’s Australian assets will be of value to Singapore trade, and is likely what enticed GIC.

Brookfield Infrastructure Partners is part of Brookfield Asset Management, based in Toronto ON. G&W will be its first major North American rail asset {brookfield.com}.

 

GIC is one of Singapore’s sovereign wealth funds. Apart from its objective qualities as a financial opportunity, G&W’s Australian assets look to be supportive of Singapore’s trade strategy. {GIC.com.sg}

G&W’s NECR/New England Central, P&W/Providence & Worcester, SLR/St. Lawrence & Atlantic, SLQ/St. Lawrence & Atlantic (Quebec), CBNS/Cape Breton & Nova Scotia, CSO/Connecticut Southern, and MSTR/Massena Terminal railroads play a major role in Atlantic Northeast regional commerce.

Key elements of the agreement are:

  • Genesee & Wyoming Inc. stockholders will receive $112 in cash per share of common stock
  • That price represents a premium of 39.5% to G&W’s unaffected per share price on March 8, 2019, the day prior to initial media speculation of a potential transaction
  • Brookfield Infrastructure and GIC will be acquiring a North American rail business with significant scale
  • The transaction has received the unanimous approval of G&W’s Board of Directors and is subject to approval by G&W’s stockholders

G&W, Brookfield, and GIC released a joint press release:

BROOKFIELD, NEWS, July 01, 2019 (GLOBE NEWSWIRE) — Genesee & Wyoming Inc. (NYSE:GWR) (“G&W”), together with Brookfield Infrastructure (NYSE: BIP; TSX: BIP.UN), GIC and Brookfield Infrastructure’s institutional partners (together referred to as the “Consortium”), are announcing an agreement pursuant to which affiliates of Brookfield Infrastructure and GIC will acquire G&W in a transaction valued at approximately $8.4 billion including debt (the “Transaction”). The Transaction will result in G&W becoming a privately held company. Under the new ownership, G&W will continue to focus on world class safety and outstanding service, while pursuing the company’s strategic goals.

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 essential transportation infrastructure services over more than 26,000 kilometers of track, providing access to its well-diversified customer base.  

“We believe this transaction is an excellent outcome for all G&W stakeholders,” said Jack Hellmann, G&W Chairman and Chief Executive Officer. “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%.”

“For our customers, employees, and Class I partners, 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,” Hellmann continued. “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.”

“This is a rare opportunity to acquire a large-scale transport infrastructure business in North America,” said Sam Pollock, Chief Executive Officer of Brookfield Infrastructure. “G&W will be a significant addition to our global rail platform and will expand our presence in this sector to four continents. G&W provides critical transportation services to more than 3,000 customers, and its cash flows have proven to be highly resilient over many years. Brookfield Infrastructure is well suited to work with the company to continue to improve the business, given our significant experience owning and operating rail, ports and other large scale, transportation infrastructure businesses.”

Ang Eng Seng, Chief Investment Officer for Infrastructure at GIC, said, “As a long-term investor, GIC is confident G&W will continue to generate steady profitability, given its diversified operations and customer base. We look forward to partnering with G&W’s management and Brookfield Infrastructure to support the future growth of the company.”

Transaction Details

Pursuant to the agreement, each issued and outstanding share of G&W will be converted into the right to receive $112 per share in cash. The Transaction price of $112 per share of G&W common stock represents a 39.5% premium to the unaffected per share price of $80.28 on March 8, 2019, the day prior to initial media speculation of a potential transaction.

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% 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.

 

Due to the pending sale, G&W will cease reporting monthly carloads and will not hold a conference call for its second quarter 2019 financial results. G&W expects to file its second quarter 2019 10-Q by close of business on August 9, 2019. {Bloomberg}