LOS ANGELES Billionaire
investor Carl Icahns proposal to gain control of
Greenbrier Cos. could lead to the merger of two of the largest
U.S. rail car manufacturers.
Icahns American Railcar
Industries Inc. (ARII) has bid $20 apiece for the outstanding
Greenbrier common shares that it doesnt 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 Americas rail car deliveries, which the
company says is double ARIIs share.
Among Greenbriers 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
ARIIs proposed takeover by late Tuesday. Last month, it
was disclosed that Icahn had previously purchased 10 percent of
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
Icahns 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
Greenbriers 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
Greenbriers 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