Genesee & Wyoming Inc.’s (G&W) subsidiary Genesee & Wyoming Australia (GWA) has entered into agreements to acquire Glencore Rail (GRail) for $1.14 billion (Australian) and concurrently issue a 49 percent equity stake in GWA to funds managed by Macquarie Infrastructure and Real Assets (MIRA). The agreement will create a GWA partnership with MIRA. The transaction is expected to close on December 1, 2016, subject to Australian Foreign Investment Review Board approval.
“The acquisition of Glencore Rail solidifies GWA’s position as the most efficient rail operator with the highest service quality in the Australian rail market,” said Jack Hellmann, G&W president and CEO. “Through the acquisition and 49 percent new equity issued to MIRA, we are effectively doubling the size of GWA and retaining 51 percent of a business with stronger long-term free cash flow and a significant portion of GWA’s rail shipments under long-term, take-or-pay contracts.”
“We are pleased to be partnering with G&W, a leading global rail operator in their Australian business,” stated Frank Kwok, Asia-Pacific co-head of MIRA. “GWA is a strong business that owns and operates essential rail infrastructure supporting industries primarily operating in regional Australia. For MIRA, this agreement expands our infrastructure footprint in Australia and allows us to contribute our international experience investing and managing transport and transport services assets.”
The acquisition will strengthen GWA’s footprint in Australia by adding a significant presence in the Hunter Valley coal supply chain in New South Wales, and it will complement GWA’s existing intermodal, agricultural and mining business in South Australia and the Northern Territory.
GRail’s coal haulage business is an alternative rail service provider to the incumbent railroads in the Hunter Valley in Australia. G&W’s Freightliner Australia subsidiary is the rail operator of GRail and will continue these services following the GRail transaction.