STRATEGIC BENEFITS AND FREQUENTLY ASKED QUESTIONS (FAQ)
Trinity Industries, Inc. and Thrall Car Manufacturing Company have signed a merger agreement under which Thrall will merge its operations with Trinity Industries railway supply businesses in exchange for cash and Trinity stock. The new entity will focus on the design, manufacturing and marketing of a complete range of rail freight products and services to meet the evolving needs of the rail industry. The agreement is subject to customary regulatory approvals and is expected to close by the end of the year. The merger will not become effective until it receives approval and the transaction is closed.
The merger of Trinitys railcar manufacturing business with Thrall represents a true merger of complementary businesses. Trinity Industries, Inc. and Thrall Car Manufacturing Company both have track records of driving innovation and growth in the railcar industry. Both companies bring unique strengths and capabilities to the new entity. The leadership and employees of both businesses are committed to working closely together to serve the evolving needs of the rail industry.
The merger creates a global rail solutions leader with a broad line of product offerings. The merger brings together in a single company a full complement of railcar product lines, proven research and development leadership, and extensive manufacturing expertise in both North America and Europe. Together, they can serve an expanded breadth of customers, including railroad companies, railcar leasing companies, and shippers of a wide variety of products.
The merger creates a sound platform for sustainable growth and competitiveness. In light of the rail industrys increasing demand for greater cost efficiencies, the case for the Trinity-Thrall combination is clear and compelling. Trinity and Thrall bring together many complementary capabilities, including specialization in designing and manufacturing tank cars and auto racks, respectively. Their combined operations will promote more efficient utilization of their manufacturing assets, and will result in cost reductions and greater flexibility in meeting the needs of customers. The two companies also have a shared commitment to investing in the research and development activities needed to keep rail freight competitive by delivering innovative, cost-effective solutions to their customers.
The merger is a win for customers, shareholders and employees alike. Customers will benefit from greater production, increased flexibility, world-class engineering, and improved cost position. Shareholders will benefit from financial synergies and a stronger asset base. Employees will benefit from new opportunities created by the merger.
FAQ (FREQUENTLY ASKED QUESTIONS)
1.What is the basic background on the Trinity-Thrall merger? Trinity Industries, Inc. and Thrall Car Manufacturing Company have signed a merger agreement under which Thrall will merge its operations with Trinity Industries railway supply businesses in exchange for cash and Trinity stock. The new entity will focus on the design, manufacturing and marketing of a complete range of rail freight products and services to meet the evolving needs of the rail industry. The agreement is subject to customary regulatory approvals and is expected to close by the end of the year. The merger will not become effective until it receives approval and the transaction is closed.
2.What are the terms of the transaction? Under the terms of the agreement Trinity will pay $165 million in cash and issue 7.15 million shares of its common stock to the shareholders of Thrall upon completion of the transaction. Trinity has also agreed to make additional payments, not to exceed $45 million over five years, based on a formula related to annual railcar industry production levels.
3.Who will manage Trinitys railcar business? The combined railcar manufacturing operation will be led by a combination of the senior officers from Trinity's and Thrall's railcar manufacturing businesses. Michael E. Flannery, currently Vice Chairman of Thrall, will serve as CEO of the combined railcar enterprise and will report directly to Trinitys CEO, Tim Wallace. Martin Graham, currently President and Chief Operating Officer of Thrall, will be President of the combined Freight Car Division. Jeffrey Marsh, currently President of Trinity's Tank Car Division, will remain in his current role. Patrick Wallace will become President of the Rail Component Parts Division. Craig Duchossois, current Chairman of Thrall, will have a seat on the Trinity board. The management team brings a tremendous track record for driving innovation and growth. We are confident this team will generate significant long-term value for our shareholders, employees and customers.
4.What are the synergies between the companies? The merger will provide key strategic, operational and financial benefits. The combined entity will offer customers an industry-leading, full product line of rail solutions, underscored by Trinity's strength in the tank car segment, Thrall's strength in auto rack manufacturing, and the combined research and development expertise throughout the entire spectrum of railcars. The new entity and its customers will also benefit from reduced operational costs through improvements in supply chain performance, greater plant efficiency, the development of dedicated production lines and more flexible production and delivery options.