Greenbrier has signed a $400m definitive agreement to acquire the manufacturing business of American Railcar Industries (ARI) from ITE Management, an affiliate of ITE Rail Fund.
The unit’s gross purchase price totals $430m, which includes an investment of $30m in ARI’s railcar lining operations and other facility improvements.
The gross purchase price also includes convertible notes issued by Greenbrier to ARI in the principal amount of $50m.
The scope of the acquisition involves two railcar manufacturing facilities in Arkansas. It also comprises five other operations that supply railcar components such as hopper car outlets, tank car valves, axles, castings and railcar running boards among others.
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The deal is expected to strengthen Greenbrier’s manufacturing business, as well as expand its product portfolio.
Greenbrier expects the deal to bolster its workforce and generate significant production efficiencies and cost savings.
Greenbrier chairman and CEO William Furman said: “We expect the acquisition to be meaningfully accretive and position Greenbrier for growth in our core manufacturing and engineering business in North America.
“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 US-based production and an expansion of our American-based workforce.”
Subject to customary regulatory reviews and approvals, the transaction is expected to close later this year.
ITE Rail Fund acquired ARI in December. Following the completion of this transaction, it will continue to own the maintenance, servicing and leasing businesses. Around 14,000 railcars are associated with its leasing business.
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