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Investor Icahn seeks Greenbrier takeover

Keywords: Tags  rail manufacturers, rail cars, Greenbrier, ARII, Gunderson, William Furman, Carl Icahn, Frank Haflich

LOS ANGELES — Billionaire investor Carl Icahn’s proposal to gain control of Greenbrier Cos. could lead to the merger of two of the largest U.S. rail car manufacturers.

Icahn’s American Railcar Industries Inc. (ARII) has bid $20 apiece for the outstanding Greenbrier common shares that it doesn’t already own in a potential $543-million transaction, according to a filing with the U.S. Securities and Exchange Commission. Icahn is majority owner of St. Charles, Mo.-based ARII.

Oswego Lakes, Ore.-based Greenbrier manufactures rail cars, marine barges and railroad equipment in the United States and Mexico and claims to make 24 percent of North America’s rail car deliveries, which the company says is double ARII’s share.

Among Greenbrier’s units are Gunderson LLC, a Portland, Ore.-based barge and rail car manufacturer that is considered one of the largest consumers of carbon steel plate on the West Coast.

Greenbrier had not replied to ARII’s proposed takeover by late Tuesday. Last month, it was disclosed that Icahn had previously purchased 10 percent of Greenbrier’s shares.

Greenbrier president and chief executive officer William A. Furman called Icahn "a respected investor" with whom Greenbrier had previously had "considerable interaction on several occasions." Furman said at the time that Icahn had notified him of the investment and suggested "further discussions possibly relating to strategic opportunities."

Furman also noted that not only was Greenbrier a joint-venture partner with ARII in Alliance, Ohio-based rail car equipment manufacturer Ohio Casting Co., but it also had purchased more than 2,000 rail cars from ARII.

Icahn’s proposed takeover was generally greeted positively by Wall Street, although potential antitrust headwinds were forecast.

While the offer "makes sense" for Icahn, the deal "would struggle to pass an antitrust review" because the rail car industry, by some measures, is already highly concentrated, Peter Nesvold, an equity analyst at Jefferies & Co. in New York, said in a note to investors.

Greenbrier’s new rail car manufacturing backlog was 10,700 units for its fiscal fourth quarter ended Aug. 31, down from 11,500 units in the prior quarter. Moreover, new railcar orders in the period were 2,900, down from 3,100 in the previous three months. The company has forecast that new rail car deliveries for fiscal 2013 will fall to between 11,500 and 13,000 units, down from 15,000 deliveries in the preceding 12 months.

Icahn previously considered acquiring Greenbrier about four years ago, but in 2009 Greenbrier’s backlog was nearly decimated when its largest customer, General Electric Co., sought to "substantially reduce, delay or otherwise cancel" the delivery of some 11,900 rail cars.

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