US-based transportation equipment and services provider Greenbrier Companies has signed an agreement to buy a 19.5% ownership stake in Brazil’s Amsted-Maxion Cruzeiro.
The new strategic deal is subject to customary closing conditions and Amsted-Maxion Cruzeiro expects to pay its outstanding debt and help future company growth.
The transaction is valued at around $10m and is expected to complete in Q4 of Greenbrier’s fiscal year ending 2016.
Amsted-Maxion Cruzeiro makes castings and components for railcars and other heavy equipment. It was jointly owned by Amsted Rail Company (Amsted) and Iochpe-Maxion.
It also provides services to several transportation equipment markets axross Latin America and supplies railcar castings and components to Greenbrier-Maxion. In addition, it provides components for heavy equipment used in agriculture, mining, and other industrial applications.
In the last calendar year, the company registered net sales of around $100m. Greenbrier-Maxion recoded over $200m in net sales for the same duration.
As part of the latest investment, Greenbrier has won an option to buy another 10% interest in Amsted-Maxion Cruzeiro. This is subject to certain conditions and will expire in December next year. However, it has been modified as part of the current deal to provide Greenbrier greater flexibility.
The modified option allows Greenbrier to buy an additional direct ownership interest in Greenbrier-Maxion at any point in a range between 30.6% and 40.5%, with the option exercise price adjusted in proportion to the ownership interest received.
Greenbrier Companies chairman and CEO William Furman said: "Our first year of operations with Amsted and Iochpe at Greenbrier-Maxion has been an unqualified success.
"A sign of our progress came last month when Revista Ferroviaria, the leading rail publication in Brazil, recognised Greenbrier-Maxion as Best Freight Car Manufacturer and Best Manufacturer of Undercarriage Components over several larger, well-established multinational competitors.
"Global markets are increasing in strategic importance for Greenbrier. Over the years, Greenbrier has successfully participated in several joint ventures, internationally and domestically."