GATX, Brookfield Infrastructure to acquire Wells Fargo rail assets

Published 29/05/2025, 21:46
GATX, Brookfield Infrastructure to acquire Wells Fargo rail assets

CHICAGO - GATX Corporation (NYSE: GATX), a $5.2 billion market cap transportation asset leasing company with a "Fair" financial health score according to InvestingPro, and Brookfield Infrastructure Partners L.P. (NYSE: BIP; TSX: BIP.UN) have formed a joint venture to acquire approximately 105,000 railcars from Wells Fargo in a deal valued at $4.4 billion. GATX will also manage an additional portfolio directly acquired by Brookfield Infrastructure, including roughly 23,000 railcars and 440 locomotives.

The joint venture will initially see GATX holding a 30% equity share, with Brookfield Infrastructure holding the remaining 70%. GATX has the option to incrementally acquire full equity ownership over time. The transaction, subject to regulatory approvals, is anticipated to close in the first quarter of 2026 or earlier.

GATX’s President and CEO, Robert C. Lyons, expressed confidence in the company’s ability to integrate the new fleet, citing a history of expertise in asset, commercial, and operational management. Lyons anticipates the acquisition to be "modestly accretive to earnings per share" in the first year post-closing, with more significant contributions to follow.

The joint venture assets will be managed by GATX, and the company expects to maintain its current financial flexibility and growth across all business sectors. The joint venture will be funded by a combination of partner equity contributions and a $3.2 billion term loan and $250 million revolving credit facility provided by Wells Fargo Securities, LLC, BofA Securities, MUFG Bank Ltd., and Sumitomo Mitsui Banking Corporation (SMBC). GATX currently operates with a debt-to-equity ratio of 3.5x, and InvestingPro analysis indicates the company’s debt management will be crucial for future performance, with detailed debt metrics and analysis available in the Pro Research Report.

The acquired railcar operating lease portfolio, predominantly consisting of freight cars, boasts a high utilization rate of approximately 97%. GATX will consolidate the joint venture on its financial statements and expects its credit and return metrics post-acquisition to align with current measures.

GATX Corporation, with a history dating back to 1898, specializes in leasing transportation assets, including railcars, aircraft spare engines, and tank containers. Brookfield Infrastructure, part of Brookfield Asset Management, is recognized for its extensive global investments in infrastructure assets.

This strategic move is expected to enhance GATX’s fleet diversification and ability to serve its customers, further cementing its position in the North American market. The information for this article is based on a press release statement.

In other recent news, GATX Corporation reported its first-quarter 2025 earnings, surpassing expectations with an earnings per share (EPS) of $2.15, compared to the forecasted $2.07. Revenue for the quarter also exceeded predictions, reaching $421.6 million against a forecast of $417.25 million. Despite the strong earnings report, GATX maintained its full-year earnings guidance at $8.30 to $8.70 per share. In other developments, GATX shareholders approved the election of directors and an advisory resolution on executive compensation during the annual meeting. Additionally, Ernst & Young LLP was ratified as the independent registered public accounting firm for the fiscal year ending December 31, 2025. The company’s Rail North America fleet utilization remained high at 99.2%, and GATX continues to focus on investment opportunities in North America and Europe. The company also highlighted the strong performance of its joint venture with Rolls Royce in engine leasing, which is expected to remain robust throughout the year.

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