The Greenbrier Cos., Inc., Lake Oswego, Ore., entered into an agreement to acquire the manufacturing business of American Railcar Industries (ARI), Saint Charles, Mo., from ITE Management LP, New York, for $400 million.
The acquisition will diversify Greenbrier's U.S. manufacturing presence, as well as broaden its product offerings with the addition of complementary designs. 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.
"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," says 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."
The acquisition is expected to:
- Strengthen core North American product base through complementary and supplementary railcar and component offerings, including vertical supply chain benefits.
- Enhance production footprint to better serve a geographically diverse customer base.
- Provide new cost-saving opportunities through use of best practices, increased vertical integration, maximized production runs, improved supply chain efficiencies and lower transportation costs to key markets.
- Increase railcar offerings with access to vertically integrated parts and components.
- Broaden the customer base capitalizing on non-overlapping relationships with strategic operating lessors, Class I and short line railroads and shippers.