An amalgamate of Brookfield Asset Management Inc. agreed to buy Genesee & Wyoming Inc. for about $6.3 billion – expanding its global portfolio of rail corporations with a 120-line network spanning North America, Europe, and Australia.
Brookfield pays $112 a share in cash, a 40% premium from G&W’s close on March 8, the last day of trading earlier than Bloomberg News reported that the railroad operator was exploring a potential sale. The stock raised 8.5% to $108.46 on Monday.
The deal is valued at $8.4 billion together with debt, the companies stated in an announcement.
Singapore sovereign wealth fund GIC Pte will be a part of Brookfield and different companions in a consortium to handle the rail lines that include 3,000 customers and resilient cash flow. Activist investor Blue Harbour Group LP additionally has constructed a 4% stake in G&W, which trades underneath the ticker symbol GRW.
G&W had crawled 35% through Friday, compared with a 17% gain for the Standard and Poor’s Midcap 400 Index. The stock is valued at 23 times predicted earnings, in contrast with the business gauge, which is trading at 16.6 times.
G&W will get about 85% of its working revenue from its North American operations, which management an unlinked collection of lines that always join clients to major railroads’ more significant community. The company had $2.35 billion of gross sales in 2018, a 30-fold increase from when it first cited shares to the public in 1996.
The transaction is predicted to close by early 2020. Citigroup Inc., Credit Suisse Group AG, Wells Fargo & Co., and RBC Capital Markets are offering $3.15 billion of financing.