Freight railway owner and operator Genesee & Wyoming (GWR - Get Report) is being taken private by Brookfield Infrastructure Partners (BIP) , Singaporean sovereign wealth fund GIC and other institutional partners in a transaction valued at approximately $8.4 billion including debt, the firms announced on Monday.
Shares of the Darien, Conn.-based company surged nearly 9% to $108.79 at the open after Brookfield infrastructure has agreed to pay $112 a share in cash for the railway and freight operator. The transaction is expected to close by year-end 2020 and is subject to customary closing conditions, including approval by G&W stockholders and regulators.
Brookfield Infrastructure will invest approximately $500 million of equity. The remainder of the business will be owned by Brookfield Infrastructure's institutional partners and GIC. Brookfield Infrastructure's investment will be funded from existing liquidity which totaled approximately $1.9 billion at June 30, 2019.
Genesee & Wyoming's decision to sell itself comes in the wake of its recent wave of acquisitions of short-line railroads, which has made investing in the maintenance of its expanding network more costly.
Partnering with Brookfield will allow G&W to modernize and integrate its railway systems into a more streamlined and competitive network, allowing it to both extract value and compete, the firms said.
Genesee & Wyoming owns or leases 120 freight railroads organized in eight locally managed operating regions with approximately 8,000 employees serving 3,000 customers.
Shares of Brookfield ended the day Friday up 21 cents at C$62.65 on the Toronto Stock Exchange. Canadian financial markets are closed Monday in observance of Canada Day, the country's birthday.