Carlyle’s investment in Genesee & Wyoming supported its acquisition of RailAmerica, helping create a short line railroad industry leader.
About Genesee & Wyoming
Genesee & Wyoming Inc. (G&W) operates short-line and regional freight railroads and railcar switching services primarily in the U.S. and Australia. G&W’s common stock trades on the NYSE under the ticker GWR.
G&W is typically the only provider of rail services at a customer location, providing critical “last mile” access to Class I railroads. By providing customers with access to multiple Class I railways, G&W increases their transportation alternatives, significantly lowering transportation costs.
At the time of Carlyle’s exit, G&W operated 111 railroads in 11 regions, approximately 15,000 miles of owned and leased track (10,700 in North America), 1.9 million carloads (1.6 million in North America), and 1,050 locomotives (930 in North America).
G&W is headquartered in Darien, Connecticut, and has approximately 4,600 employees as of November 2013.
Key Value Creation Metrics
- Successfully acquired RailAmerica, Genesee’s largest competitor, creating a $7 billion enterprise value market leader in the short line railroad industry
- Grew revenue and EBITDA 7% and 14% on a pro forma basis as a result of growth initiatives and synergies realized from the acquisition
- Successfully leveraged the One Carlyle platform to help management grow business in international markets and extend industry tax credits
The Carlyle Group invested $350 million in G&W in October 2012 to facilitate the acquisition by G&W of RailAmerica, Inc. for $2.0 billion ($27.50 per share). At the time of the acquisition, RailAmerica was the second largest short line operator in North America, operating railroads in 28 U.S. states, three Canadian provinces and providing rail service at 12 ports. Carlyle’s investment was in the form of a convertible preferred security that represented approximately 11% of the company on a converted basis.
During Carlyle’s investment, G&W successfully integrated the RailAmerica acquisition, realizing the strategic and operational synergies underlying its acquisition strategy. In addition to providing capital to support the acquisition, Carlyle leveraged its One Carlyle platform and network to assist G&W’s further development of commercial relationships in international markets such as Australia. Carlyle also worked with management to educate officials on the importance of rail maintenance tax credits, ultimately leading to their extension.
Carlyle exited its investment in G&W in November 2013.