Unconfirmed reports in Rail Express that it is Macquarie taking on the remaining 51% of GWA.

Confirmed in the Brookfield second quarter earnings call:

https://finance.yahoo.com/news/brookfield-infrastructure-partners-lp-bip-172340328.html

Do a search of the page for Genesee or Wyoming to find the relevant section.

Will be interesting to see if the business ends up rebranded as a result.

Unconfirmed reports in Rail Express that it is Macquarie taking on the remaining 51% of GWA.

Confirmed in the Brookfield second quarter earnings call:

https://finance.yahoo.com/news/brookfield-infrastructure-partners-lp-bip-172340328.html

Do a search of the page for Genesee or Wyoming to find the relevant section.

Will be interesting to see if the business ends up rebranded as a result.

well spotted

Will be interesting to see if the business ends up rebranded as a result.

This sort of divestment would usually come with the option for the new owner to licence the original branding for at least a few years.

Brand licensing would usually be conditional upon the company not being sold on again or substantially broken up in that time, so an announcement of rebranding any time soon would be best interpreted as Macquarie signalling their intention to sell off or break up GWA.

I expect that New GWA will move fairly quickly to do what is needed to hand back the keys to the country lines they lease from the Government of South Australia. Macquarie should have been competent enough to ensure that closing these lines would not be prohibited by the brand licensing.

I expect that New GWA will move fairly quickly to do what is needed to hand back the keys to the country lines they lease from the Government of South Australia. Macquarie should have been competent enough to ensure that closing these lines would not be prohibited by the brand licensing.

Already being talked about I believe - even more importantly the sidings at the main line silos which still fall under GWA control.

Will be interesting to see if the business ends up rebranded as a result.

This sort of divestment would usually come with the option for the new owner to licence the original branding for at least a few years.

Brand licensing would usually be conditional upon the company not being sold on again or substantially broken up in that time, so an announcement of rebranding any time soon would be best interpreted as Macquarie signalling their intention to sell off or break up GWA.

I wouldn't think this would be needed for an industrial business like this.  Id almost want to prevent future use of the name so as to minimise any possible competition issues that this sale is designed to prevent.

I wouldn't think this would be needed for an industrial business like this.

GWA is not an industrial, it is a service provider which relies on B2B sales and consequently needs to take its branding seriously. They need the time to be allowed to develop a comprehensive rebranding strategy, not just change it overnight.

Id almost want to prevent future use of the name so as to minimise any possible competition …

Periods of brand licensing and non-competition are standard for a divestiture, buyers hold most of the cards and have the duty to their shareholders to take steps to ensure they are not sold a pup.

I would be astonished if the Macquarie-led consortium did not insist on a period (maybe as short as 2 years, probably closer to 5) of Brookfield not expanding rail operations in any of the markets where GWA operate (i.e. SA, NT, Vic, NSW).

Once that's considered, the brand licence is actually a positive move for New GWI, as it keeps the name 'active' for longer in case they ever want to re-use it and draw on the credibility of the business now owned by Macquarie.

… competition issues that this sale is designed to prevent.

I'm not convinced that regulatory issues were the real issue, it was mentioned in the memo to GWA staff but not in the quarterly earnings report. Remember that companies have to be more honest with investors than they do with employees.

Where in Australia do GWA and other Brookfield operations compete with each other?

G&W was a member of a JV that controlled Ferroviaria Oriental in Bolivia between 2002 and 2014. Acted as manager.

Sold out to local interests to avoid the possibility of nationalisation.

New indigenous owners retained livery (also applied to subsequently acquired locos), logo retained.



https://www.youtube.com/watch?v=ZxCQNPxVkFg


https://www.youtube.com/watch?v=nSjs--a9mHY

1. GWA is not an industrial, it is a service provider which relies on B2B sales and consequently needs to take its branding seriously.

2. I'm not convinced that regulatory issues were the real issue, it was mentioned in the memo to GWA staff but not in the quarterly earnings report. Remember that companies have to be more honest with investors than they do with employees.

Where in Australia do GWA and other Brookfield operations compete with each other?

1. Look at SSR and QUBE, no-one cares that they have liveries from all over the place.  The livery isn't an important feature of their business like it is for retail transport like say airlines.  Freight transport is B2B as you say which is what I mean when I say industrial and all customers know who they're dealing with - they don't get confused by paint colour.

2. If kept, GWA will be another subsidiary of Brookfeild alongside ARC and the former Patrick Ports business.  This will no doubt pique the interest of the ACCC (who are far more active at the moment) which may highlight things they don't want highlighted.  So getting rid of GWA to a willing buyer who is going to help them fund the deal through asset sale is perhaps a good move.

Just on this last point, as I think as I type (and possibly supporting your idea that its not all competition related JAP), I think this divestment in itself is a sign.  Most of these investment houses buy a business, then get them to a stage where they can sell off the good (ie profitable) parts.  I suspect that the GWA business might just be a good and profitable business already, that they can sell off from day 1, to use those proceeds to reduce the debt required for the rest of the transaction.  And Maquarie doesn't buy businesses that dont have good returns.....

And Maquarie doesn't buy businesses that dont have good returns.....
+1, regards, satisfied shareholder.

1. GWA is not an industrial, it is a service provider which relies on B2B sales and consequently needs to take its branding seriously.

1. Look at SSR and QUBE, no-one cares that they have liveries from all over the place.  The livery isn't an important feature of their business like it is for retail transport like say airlines.

They do, however, have at least a small portion of the fleet fully up to date in the current livery and take steps to ensure those vehicles are nice and spiffy when they need to have publicity photos/videos done or for major announcements.

All the other operators in Australia are the same, including GWA themselves who have their modern locos in the current livery and the older stuff in a variety of former liveries including some decrepit junk still in AN green. Even before they had the modern classes (GWA, GWN and GWU) delivered, they always had some of their older fleet kept up to date.

If/when GWA is renamed to something else, I'm sure that they will be exactly the same - part of the fleet in the new branding for the announcement and for publicity photos, and the rest left in the old colours to be repainted when they are next scheduled to go into the workshop anyway.

First impressions do matter when it comes to selling B2B services. If two companies offer pretty well the same services at the same price, the one which makes a bit of effort to impress the client has a competitive advantage. That's why big companies have corporate boxes at the footy (it's for entertaining clients, staff only get to use leftover tickets) and advertise on mainstream media in time slots which have better than normal proportions of executives and directors viewing (e.g. BHP saturating the recent Tour de France TV coverage).

Anyway, the big issue is about changing the name of the company - something never done lightly or hastily - rather than any rail operator's spiffy/scruffy loco ratio.

GWA is actually an Australian company (Genesee & Wyoming Australia Pty Ltd) and not just a division of a US company. Once Macquarie own the business, they will own the name. If Brookfield-owned GWI want to take the G&W name out of circulation in Australia, they need to propose a deal which will be to the satisfaction of Macquarie-owned GWA.

An acceptable deal for Macquarie-owned GWA would be something along the lines of voluntarily renaming itself to something else within a year or so, in return for Brookfield-owned GWI agreeing that any further entry to the Australian market would use a name other than G&W.

Confirmed to staff in a memo today..............wasn't aware of PGGM existing involvement.

"........Macquarie Infrastructure and Real Assets (MIRA) and PGGM have agreed to assume full ownership of the GWA business concurrent with G&W’s acquisition by Brookfield and GIC."

"MIRA, one of the world’s leading alternative asset managers, and PGGM, a leading Dutch pension fund manager, are already well-known to us as owners of 49% of GWA for the past three years.

The GWA transaction will be funded by equity provided by PGGM, resulting in PGGM significantly increasing its stake in GWA, with MIRA-managed funds owning the remaining stake under joint governance arrangements."

Confirmed to staff in a memo today..............wasn't aware of PGGM existing involvement.

"........Macquarie Infrastructure and Real Assets (MIRA) and PGGM have agreed to assume full ownership of the GWA business concurrent with G&W’s acquisition by Brookfield and GIC."

"MIRA, one of the world’s leading alternative asset managers, and PGGM, a leading Dutch pension fund manager, are already well-known to us as owners of 49% of GWA for the past three years.

The GWA transaction will be funded by equity provided by PGGM, resulting in PGGM significantly increasing its stake in GWA, with MIRA-managed funds owning the remaining stake under joint governance arrangements."

It's always been known that Macquarie was the leader of a consortium which bought the 49% stake rather than doing it all themselves, but it's the first time that I remember the identity of any of the other partners being disclosed.

It will be interesting to see how management changes now.  PN has definitely had a change in aggressiveness since being purchased by private equity.

https://www.railpage.com.au/news/s/new-owners-confirmed-for-gw-australia

In a statement released on August 3, Brookfield indicated it would dispose of the stake due to regulatory considerations, believed to be related to Brookfield’s existing rail operations in Australia, which includes ownership of below rail infrastructure in Western Australia, and its joint ownership of the LINX Cargo Care group. GIC, Brookfield’s partner in the GWI takeover, is also a key investor in Pacific National’s rail freight business.

That explains the use of the 'competition' argument for selling GWA.

Important to remember that these private equity takeovers are usually done by a consortium where only the leading partner is named in the media and the minor partners usually elect to stay silent.

The same applies to Macquarie's ownership of GWA, PGGC kept their involvement silent for over three years.

Brookfield to divest their stake in LINX next?

Interesting development:

https://www.railexpress.com.au/aurizon-claims-gwa-sale-violates-its-first-right-of-refusal/

Aurizon looking to enter the fray.

ACCC will be interested in what happens here I suspect.

Interesting development:

https://www.railexpress.com.au/aurizon-claims-gwa-sale-violates-its-first-right-of-refusal/

Aurizon looking to enter the fray.

ACCC will be interested in what happens here I suspect.

Ambit claim by Aurizon hoping to get a bit of pay off to offset this year's losses

ACCC wouldn't have a bar of it if it progressed beyond the courts.

If G & W are smart they will get their lawyers to ask why Aurizon did nothing back in 2016.

Interesting development:

https://www.railexpress.com.au/aurizon-claims-gwa-sale-violates-its-first-right-of-refusal/

Aurizon looking to enter the fray.

ACCC will be interested in what happens here I suspect.

Ambit claim by Aurizon hoping to get a bit of pay off to offset this year's losses

ACCC wouldn't have a bar of it if it progressed beyond the courts.

If G & W are smart they will get their lawyers to ask why Aurizon did nothing back in 2016.

Yep, an attempted cash grab - and a legal action that could cost the company more than anything it could gain. The ACCC would be keen to spoil the party. Aurizon needs to get back to funding its operations and stop funding lawyers.

Interesting development:

https://www.railexpress.com.au/aurizon-claims-gwa-sale-violates-its-first-right-of-refusal/

Aurizon looking to enter the fray.

ACCC will be interested in what happens here I suspect.

Ambit claim by Aurizon hoping to get a bit of pay off to offset this year's losses

ACCC wouldn't have a bar of it if it progressed beyond the courts.

If G & W are smart they will get their lawyers to ask why Aurizon did nothing back in 2016.

When G Rail was sold to GWA the ACCC had a look at that transaction and where was Aurizon missing in action maybe because of rules on ownership of companies working in the same business coal cartage

When G Rail was sold to GWA the ACCC had a look at that transaction and where was Aurizon missing in action maybe because of rules on ownership of companies working in the same business coal cartage

Correct.  See link below:

https://www.accc.gov.au/media-release/accc-releases-statement-of-issues-on-aurizon-and-pacific-nationals-competing-proposals-to-acquire-grail

When G Rail was sold to GWA the ACCC had a look at that transaction and where was Aurizon missing in action maybe because of rules on ownership of companies working in the same business coal cartage

Correct.  See lin
https://www.accc.gov.au/media-release/accc-releases-statement-of-issues-on-aurizon-and-pacific-nationals-competing-proposals-to-acquire-grail

Thank you for posting that link James .au Aurizon would have to sell some of there coal assets in the Hunter Valley if that went threw how lucky would QUBE be to have that coal haulage offered to them by Aurizon.

When G Rail was sold to GWA the ACCC had a look at that transaction and where was Aurizon missing in action maybe because of rules on ownership of companies working in the same business coal cartage

Correct.  See lin
https://www.accc.gov.au/media-release/accc-releases-statement-of-issues-on-aurizon-and-pacific-nationals-competing-proposals-to-acquire-grail

Thank you for posting that link James .au Aurizon would have to sell some of there coal assets in the Hunter Valley if that went threw how lucky would QUBE be to have that coal haulage offered to them by Aurizon.

GWI have released a brief statement:

Genesee & Wyoming Inc. (G&W, or the Company) (NYSE:GWR) is aware of the complaint filed in New South Wales, Australia seeking an award of damages in connection with a right of first refusal provision in a commercial contract involving its majority-owned Australian subsidiary.

The Company disputes the allegations made in the complaint and intends to defend itself appropriately. The Company undertakes no obligation to provide further updates and does not intend to comment further regarding the aforementioned matter.

As previously disclosed, the Company expects the transaction pursuant to which affiliates of Brookfield Infrastructure and GIC will acquire the Company to close by year end or early 2020, subject to customary closing conditions.

GWA is actually an Australian company (Genesee & Wyoming Australia Pty Ltd) and not just a division of a US company. Once Macquarie own the business, they will own the name. If Brookfield-owned GWI want to take the G&W name out of circulation in Australia, they need to propose a deal which will be to the satisfaction of Macquarie-owned GWA.

An acceptable deal for Macquarie-owned GWA would be something along the lines of voluntarily renaming itself to something else within a year or so, in return for Brookfield-owned GWI agreeing that any further entry to the Australian market would use a name other than G&W.

While GWA operates through a locally registered company, as is the case with all subsidiaries of foreign companies, it is controlled by the US company and the contract of sale will dictate if the G&W name can be used. Often the contract will allow the buyer to continue to use the existing brand for a set period of time, maybe 6 months or so, during which time the business has to be rebranded.