- The transaction combines the two largest short line and regional railroad operators in North America, with 108 railroads and strong exposure to eventual U.S. economic recovery.
- Estimated pro forma Total Debt to EBITDA of 4.0x at the end of 2012, which is expected to decrease to approximately 3.0x by the end of 2013.
- The acquisition is subject to United States Surface Transportation Board (“STB”) formal approval of GWI’s control of the RailAmerica railroads. GWI expects to close the transaction into a voting trust as early as Q3:2012 while it awaits formal STB approval of GWI’s application to control RailAmerica’s railroads. Upon formal STB approval, GWI would be able to fully integrate RailAmerica. STB formal approval may be as early as Q4:2012 but could be delayed until Q3:2013.
- While the RailAmerica railroads are held in a voting trust, GWI expects to account for the acquisition using the equity method of accounting and will not realize the cost synergies of the business combination. Upon integration, cost savings are expected to be at least $36 million (75% realized within one year of close; 100% realized within 18 months of close).
- If GWI is approved to fully integrate RailAmerica’s railroads by Q4:2012, EPS accretion is expected to be greater than 10% in 2013.
- The $27.50 per share purchase price represents a premium of 10.6% over the closing stock price as of July 20, 2012, the last trading day prior to this announcement, and a premium of 27.6% over the closing stock price as of May 21, 2012, the last trading day prior to the date on which RailAmerica announced that it was exploring strategic alternatives.
Genesee & Wyoming Inc. Announced Today That It Has Entered Into An Agreement To Acquire RailAmerica, Inc. (Graphic: Business Wire)
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