Tuesday, June 01, 2010

Progress Rail to acquire EMD

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Progress Rail Services Tuesday said it has signed a definitive agreement to purchase Electro-Motive Diesel, Inc. (EMD) for $820 million in cash from Berkshire Partners LLC and Greenbriar Equity Group LLC.

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Upon completion of the transaction, La Grange, Ill.-based EMD, once part of the vast General Motors empire, would become a wholly-owned subsidiary of  Albertville, Ala.-based Progress Rail, itself wholly owned by Peoria, Ill.-based Caterpillar Inc.

The acquisition is expected to close by the end of the year, pending final regulatory approvals. EMD will remain headquartered in LaGrange, Ill. John Hamilton will continue as president and CEO of EMD and will report to Progress Rail CEO Billy Ainsworth.

“This acquisition represents the latest step in our strategic plan to aggressively grow our presence in the global rail industry,” said Caterpillar Vice Chairman and CEO-Elect Doug Oberhelman. “Including today’s announcement and our acquisition of Progress Rail, Caterpillar has invested about $2 billion since 2006 to grow our profitable rail and transit businesses. Rail has proven to be a highly efficient and sustainable method for moving freight and people, and we see a positive long-term future for the continued growth of the rail industry.”

Said Progress Rail CEO Ainsworth, “The acquisition of EMD will enable us to provide rail and transit customers an industry-leading range of locomotive, engine, and emissions solutions, as well as unmatched aftermarket product and parts support and a full line of rail-related services and solutions.”

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“We feel this is an ideal fit for EMD and our customers and we look forward to developing and providing an even greater portfolio of products and services for the rail and transit industry that we have proudly served for more than 85 years,” said EMD’s Hamilton.

“We are very proud to have had the opportunity to partner with EMD’s management in rebuilding this rail industry icon,” said Regg Jones, managing partner of Greenbriar. “Having redirected the company’s strategy and restored EMD back to strong operating and financial footing, we are confident EMD will continue its growth and success with Progress Rail.”

Richard Lubin, managing director of Berkshire Partners, added, “Our objectives coming in were to transition EMD to a strong, independent company focused on its customers, invest in EMD’s technology and capabilities, and drive operational improvement. We are delighted Progress Rail will be the new owner of this business.”