For a reported $1.4 billion, Genesee & Wyoming Inc. is acquiring RailAmerica Inc., combining the two largest short-line and regional rail operators in North America.
Greenwich-based GWI is paying $27.50 for each share of RailAmerica, representing an 11 percent premium. The company is funding the deal in part with up to $800 million of equity financing from The Carlyle Group, a private equity fund based in Washington, D.C., with Bank of America Merrill Lynch furnishing debt financing as part of the transaction.
RailAmerica is based in Jacksonville, Fla., and its holdings include the Connecticut Southern Railroad, which moves construction material and debris on more than 40 miles of track in the Hartford area where it is based.
Combined, GWI and RailAmerica will operate more than 110 railroads, totaling 1,000 locomotives on more than 15,000 miles of track and 4,300 employees. The companies say the deal will result in annual savings of at least $36 million, without immediately detailing any layoffs they may pursue in their bid to cut costs.
“This (rail) footprint not only provides us with strong leverage to any eventual recovery of the U.S. economy but also creates a powerful platform for future industrial development along railroads in the 37 U.S. states in which we will do business,” said GWI CEO Jack Hellmann, in a prepared statement. “We have now grown to the size and management capabilities to integrate RailAmerica successfully.”
The deal is subject to approval of the U.S. Surface Transportation Board.
