The freight-car market’s hardly been a hotbed of activity this year. But officials at merger-minded Trinity Industries Inc. and Thrall Car Manufacturing Co. believe their combined operation could add a little heat — as well as alter the market dynamics — in the months ahead.
The two companies Aug. 13 announced they’d entered into a definitive agreement under which Thrall would combine its operations with Trinity’s rail-car manufacturing business in exchange for cash and Trinity stock.
Under the deal’s terms, Trinity — whose stock trades on the New York Stock Exchange — would pay about $165 million in cash and issue 7.15 million common-stock shares to shareholders of privately held Thrall. Trinity also would make additional payments, not to exceed $45 million over five years, based on a formula related to annual rail-car industry production levels.
Given Trinity’s strength in the tank-car segment, and Thrall’s in auto-rack manufacturing, Trinity Industries Chairman, President and Chief Executive Officer Timothy Wallace in a prepared statement called the combination "an ideal platform for providing customers with a full range of advanced rail-car solutions." Added Thrall Chairman Craig Duchossois, who would join Trinity Industries’ board: "We firmly believe the synergy between Trinity and Thrall will produce a stronger, more dynamic company for today and well into the future."
A cross-section of senior officers from both companies would lead the combined operation. Michael Flannery, currently Thrall’s vice chairman, would serve as CEO of the combined enterprise and report to Wallace. Martin Graham, Thrall’s president and chief operating officer, would be president of the Thrall-Trinity Freight Car Division. Jeffrey Marsh would remain president of Trinity’s Tank Car Division. Patrick Wallace, president of Trinity’s Freight Car Division, would be named president of Trinity’s Rail Component Parts Division, which would be part of the new entity.
The transaction, which is subject to regulatory approvals, could close by year’s end, according to a jointly issued Trinity-Thrall statement.