The Greenbrier Companies announced that it has entered an agreement to acquire a 19.5% ownership in Amsted-Maxion Hortolandia, the leading railcar manufacturer in South America, for $15 million. The agreement also provides Greenbrier with an option to acquire an additional 40.5% ownership interest, to be exercised no later than September 30, 2017. The strategic investment is subject to customary closing conditions and is expected to close in the second calendar quarter of 2015.
Amsted-Maxion Hortolandia holds an estimated 70% annual market share in the South American new railroad freight car market. Market demand in Brazil is forecasted to exceed approximately 4,000 new railcars annually for the near term and potentially through the end of this decade. Longer term new railcar demand is expected to increase significantly in Brazil, the world’s 7th largest economy measured by GDP. This demand is expected to be driven by both its extensive investment in infrastructure, including plans to expand and modernize the Brazilian railway network, and an aging railcar fleet where more than 60% of rail freight rolling stock is 30 years or older and less efficient than the railcar design technology available today.
Amsted-Maxion, a 50/50 joint venture between Amsted Rail andIochpe-Maxion, will continue to own the remaining 80.5% in Amsted-Maxion Hortolandia. Amsted-Maxion will also continue to own 100% of Amsted-Maxion Cruzeiro, which provides various castings to Hortolandia. In 2013, Greenbrier and Amsted-Maxion established a relationship by entering into a licensing agreement related to the production of intermodal railcars designed by Greenbrier.
“Using Brazil as a platform, this strategic investment permits Greenbrier to expand our geographic reach into South America, as part of a broad-based Americas strategy, building on our substantial manufacturing base in Mexico and the US. Combined with our already strong and growing manufacturing operations in Europe and North America, entry to the South American railcar markets represents an exciting new extension for Greenbrier,” said William A. Furman, Chairman and CEO of Greenbrier. “Amsted-Maxion is the perfect partner for Greenbrier as we enter this market. We look forward to a long and prosperous partnership with Amsted-Maxion.”