Concurrent with the sale, Greenbrier will enter into a long-term supply agreement with Timken for reconditioned and new bearings. The companies did not disclose the asset purchase price. Closing of the transaction is expected before the conclusion of Greenbrier's fiscal third quarter ending May 31, 2013.
Lake Oswego, Ore.-based Greenbrier Cos. said the move was part of its strategy "to reduce non-care assets to enhance earnings and capital return."
The Greenbrier Cos. acquired the Elizabethtown facilities in 2008 to provide reconditioned wheel bearings for use in Greenbrier's Wheel Services, Refurbishment & Parts segment. Elizabethtown has employed an average of 100 people during Greenbrier's last two fiscal years and is Greenbrier's only wheelset roller bearing reconditioning facility. The operation is profitable, the company noted, but "recent changes in rules related to reconditioned components and a constrained availability of certain key materials has diminished the strategic value of this operation rendering it a non-core asset to Greenbrier, " it said.
"With the completion of this transaction, we are well positioned to focus on our core strengths of heavy railcar repair, refurbishment, complete wheel services and routine railcar maintenance and pursue the growth opportunities that these areas offer," said Timothy A. Stuckey, president of Greenbrier Rail Services. "We are pleased to partner with Timken to ensure that our requirements for new and reconditioned wheelset roller bearings will continue without interruption."
"Like Greenbrier, Timken is committed to improving the productivity, safety and efficiency of our rail customers," said Brian Ruel, vice president of off-highway, light vehicle systems and rail for Canton, Ohio-based Timken. "This agreement aligns with our strategy to grow our services portfolio and invest in the rail business."
To complete the asset purchase transaction, Greenbrier and Timken will complete a transition plan over the course of Greenbrier's fiscal third quarter. This will include preparing equipment and remaining inventory for transfer to Timken facilities. The land and buildings owned by Greenbrier at Elizabethtown are not included in the asset purchase agreement and will be listed for sale by Greenbrier after completion of the transition plan.