Genesee & Wyoming Inc. (G&W), Darien, Conn., acquired approximately 95% of the shares of London-based Freightliner Group Ltd. from Arcapita and other shareholders for cash consideration of approximately $755 million. Members of the existing Freightliner management team will retain an approximate 5% ownership interest with G&W to own 100% by mid-2020. The acquisition is expected to close during the first quarter of 2015.
Freightliner is an international freight rail operator with operations in the United Kingdom, Poland, Germany, the Netherlands and Australia. Its principal business in the UK is said to be the second largest freight rail operator, providing intermodal and heavy haul service throughout England, Scotland and Wales. Its subsidiary is said to be the largest rail maritime intermodal operator in the UK, providing intermodal container services from the major deep sea ports of Felixstowe, Southampton, London Gateway and Tilbury to a network of inland terminals, primarily for global maritime shipping customers. Freightliner operates out of 13 terminals, eight of which are owned, including Birmingham, Bristol, Cardiff (Wales), Coatbridge (Scotland), Doncaster, Leeds, Liverpool and Manchester. As part of its intermodal service, Freightliner also operates a fleet of over 250 trucks for local pickup and delivery, providing a fully integrated port-to-door service. In addition, Freightliner’s heavy haul subsidiary provides bulk rail freight service throughout the UK, primarily serving the aggregates, cement, coal and waste industries, and provides infrastructure train service to Network Rail, the UK rail network infrastructure owner.
“The acquisition of Freightliner is an excellent strategic fit for G&W,” says Jack Hellmann, president and CEO of G&W. “First, we are adding a world-class intermodal and heavy haul franchise in the United Kingdom that will be the foundation of G&W’s European Region. Second, the overlap of our respective rail businesses in Australia and the Netherlands will unlock operating synergies and expand our presence in each of those markets. Third, we are pleased to be joined by a highly talented management team, who have a long track record of success in building Freightliner over the past two decades. Working together, we expect to build the existing business and also unlock a range of attractive rail investment opportunities worldwide.
“Following the Freightliner acquisition, G&W will be best understood by looking at three parts. The first will be our traditional North American short line and regional railroad operations, which is expected to contribute approximately 77% of annual pro forma operating income, where we will continue to execute on our long-term plan of commercial growth across our coast-to-coast rail footprint as well as acquisition growth from further consolidation of the short line rail industry. The second will be our Australian operations, which is expected to contribute approximately 12% of annual pro forma operating income, where our above-rail and below-rail operations in South Australia and the Northern territory will be combined with Freightliner’s above-rail business in New South Wales. The third part will be our European operations, which is expected to contribute approximately 11% of annual pro forma operating income, with Freightliner’s UK business as the cornerstone that also will lead the development of our intermodal business serving deep sea ports in northern Europe and our heavy haul operations in Poland.
“For Freightliner’s 2,500 employees, we look forward to working together to leverage the strength and skills of our global employee base, deploying best practices from both G&W and Freightliner to enhance the safety and quality of our rail services worldwide. For Freightliner’s customers, we are committed to deliver the same locally focused and responsive rail service that is the hallmark of both Freightliner and G&W, and we are excited about the opportunity to expand our global customer relationships going forward.”
“G&W brings additional investment firepower, extended international reach and increased below-rail infrastructure expertise to add to the existing strengths of the Freightliner Group,” says Russell Mears, chief executive officer of Freightliner. “Their commitment to safety and service quality in all activities mirrors our own values.”