Brookfield Asset Management has joined forces with Singapore’s GIC and a group of smaller investors to acquire Genesee & Wyoming, a US freight railroad owner and operator, for about $8.4bn, in the latest in a series of acquisition lead by the deal-hungry Canadian investment group.
The Brookfield-led consortium of investors has agreed to pay G & W shareholders $112 in cash for each common stock, a 39.5 per cent premium based on the company’s stock price prior to media reports on March 8 about a sale.
Brookfield, which has about $475bn of assets under management since it acquired capital markets investor Oaktree Capital, has deployed billions of dollars in mega deals in recent months buying several assets in financial services, real estate and infrastructure sectors.
Toronto-based Brookfield is rapidly becoming the main rival to the Stephen Schwarzman’s Blackstone, which remains the most dominant alternative asset manager, with assets ranging from real estate to technology companies.
G & W controls a portfolio of 120 railroads across North America, Europe and Australia, where it provides transportation services to over 3,000 customers along more than 26,000km of tracks.
“This is a rare opportunity to acquire a large-scale transport infrastructure business in North America,” Sam Pollock, chief executive of Brookfield Infrastructure, said. “[G & W’s] cash flows have proven to be highly resilient over many years.”
Brookfield said it will investment about $500m of equity; the rest will be owned by the Canadian firm’s institutional partners and GIC. Financing for the deal will be led by a syndicate of banks including Credit Suisse, Wells Fargo, Citigroup and RBC.
The deal is expected to close at the latest by early 2020. For the transaction to go through G & W will need the backing of shareholders controlling 66 per cent of the outstanding common stock.