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10/16/2006



Rail News: Rail Industry Trends

Greenbrier acquires Meridian Rail Services, forms freight car-building joint venture with Mexican firm



The Greenbrier Cos.’ portfolio is getting considerably larger. Today, the company announced it reached an agreement to acquire wheel maintenance service provider Meridian Rail Holdings Corp. and formed a joint venture with Grupo Industrial Monclova (GIMSA) to build freight cars for the North American marketplace.

Under a transaction expected to close within 30 days, Greenbrier will acquire Meridian Rail Services from a private equity firm for $227.5 million in cash (plus or minus working capital adjustments). Meridian operates six wheel shops in the United States and Mexico, one coupler reconditioning facility in Chicago and one rail-car repair shop in Mexico; and supplies replacement wheel sets and provides axle services to about 170 freight-car maintenance facilities. Greenbrier now will operate 10 wheel shops and 20 repair/refurbishment and replacement parts facilities in North America.

Meridian will maintain its workforce of 300. Chief Executive Officer Rick Turner will become president of Greenbrier’s Wheel Services Group and report to Greenbrier Rail Services Group President Tim Stuckey.

“The acquisition, along with our recent acquisition of Railcar America, supports our strategy to continue to grow our rail-car repair, refurbishment, maintenance and replacement parts businesses, which are less cyclical and higher margin than our new rail-car manufacturing business,” said Greenbrier Presdient and CEO William Furman in a prepared statement. “The increased emphasis by railroads on velocity and efficient capacity utilization will bring rapid change and favor Greenbrier’s business model.”

Meanwhile, Greenbrier formed a 50/50 joint venture with GIMSA to build freight cars at GIMSA’s Monclova, Mexico, plant. The companies will begin producing cars — initially 500 covered hoppers for Greenbrier — in second-quarter 2007. Annual production is expected to reach 3,000 cars.

“The joint venture will allow us to quickly capitalize on the current demand for new rail cars, at a modest initial investment of less than $10 million for one production line,” said Furman.


Contact Progressive Railroading editorial staff.

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