VTG Aktiengesellschaft reached a definitive agreement to acquire CIT Rail Holdings (Europe) SAS and the associated NACCO Group, the fourth largest private rental company of rail freight cars in Europe. The agreement to sell NACCO, the European rail leasing business, to VTG has a value of EUR 780 million. The transaction is expected to close in the fourth quarter of 2017 following customary closing conditions.
With this transaction, VTG’s fleet is growing by 14,000 freight cars, from over 80,000 to more than 94,000 railcars worldwide.
“With the agreement to acquire CIT Rail Holdings SAS, we are strengthening our market position in Europe sustainably. With the NACCO fleet, we are offering our customers an even greater and more differentiated portfolio and an even stronger presence in Europe,” Heiko Fischer, CEO of VTG said.
VTG expects a purchase price of approximately EUR 780 million plus all investments made by the NACCO Group in rail freight cars between January 1 2017 and closing date which could sum up to EUR 140 million. The company intends to finance the transaction via a senior loan of up to EUR 500 million, a privately placed hybrid bond of approximately EUR 300 million and the assumption of existing net debt of approximately EUR 120 million. It is envisaged to refinance the privately placed hybrid bond via the capital market, potentially via a rights issue for the increase of VTG’s capital from the authorized capital.
Depending on the investments in railcars made by NACCO in 2017, VTG expects a sales contribution of approximately EUR 120 million from the acquisition in the year 2018 and an EBITDA contribution of approximately EUR 100 million before transaction and integration costs, including significant synergies.
CIT Rail Holdings (Europe) SAS is headquartered in Paris and is a wholly owned indirect subsidiary of CIT Group Inc. and currently has about 14,000 railcars in Europe with the NACCO Group. The main markets are in France, Germany, Austria and Eastern Europe. The fleet includes a well-balanced portfolio of different freight cars from all major segments.
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