Greenbrier to acquire manufacturing business of American Railcar
Greenbrier announced that it has entered into an agreement to acquire the manufacturing business of American Railcar Industries, or ARI, from ITE Management, or ITE, in a transaction valued at $400M, after adjustments for net tax benefits accruing to the company, valued at $30M. The gross purchase price of the manufacturing business totals $430M. Included in the gross purchase price is $30M for capital expenditures on railcar lining operations and other facility improvements at ARI. Also included in gross purchase price are convertible notes issued by Greenbrier to ARI in the principal amount of $50M. The balance of the gross purchase price is cash consideration. Headquartered in St. Charles, Missouri, ARI was acquired by ITE in December 2018. Greenbrier will acquire two railcar manufacturing facilities in Arkansas and five other operations that provide a range of railcar component and parts supply. These operations build hopper car outlets, tank car valves, axles, castings and railcar running boards, among other ancillary railcar products. Significant manufacturing efficiencies and cost savings are expected from the acquisition, along with a skilled workforce and geographic advantages throughout North America. "We expect the acquisition to be meaningfully accretive and position Greenbrier for growth in our core manufacturing and engineering business in North America. Cost synergies and economies of scale are expected to benefit our customers, including shippers, leasing companies and North American railroads," said William Furman, Chairman and CEO. "With a broader product portfolio and efficiencies extending from a larger operations base in America, we see this acquisition as a unique opportunity for Greenbrier to extend its position as a global leader in railcar manufacturing, with an increase in our total U.S.-based production and an expansion of our American-based workforce. We are especially pleased to work with ITE on this acquisition, since we already enjoy a strong relationship with them as a valued syndication customer."