Icahn Enterprises to sell American Railcar Leasing to SMBC Rail

SMBC Rail Services LLC has signed an agreement to purchase American Railcar Leasing LLC (ARL) from Icahn Enterprises for an enterprise value of $2.78 billion and a fleet of 29,000 rail cars, the companies announced yesterday.

The initial closing is expected to occur in second-quarter 2017. For three years after the closing, SMBC Rail will have an option to purchase 4,800 additional rail cars for about $586 million, which would bring the total sale price to $3.364 billion, according to an Icahn Enterprises press release.

SMBC Rail is the rail-car operating lessor and fleet management business of Sumitomo Mitsui Banking Corp.

The transaction will result in a full-service lessor of rolling stock, with a combined fleet of more than 50,000 rail cars that can carry a variety of commodities across North America, SMBC officials said.

Industries that will be served include energy, steel, agriculture, petrochemical and consumer goods.

"The combined fleets of SMBC Rail and ARL is an example of two complementary businesses coming together to provide better solutions for our customers. This portfolio will be one of, if not the youngest, most efficient, diversified fleets in the industry," said Gene Henneberry, president and chief executive officer of SMBC Rail, in a company press release.

Chicago-based SMBC Rail was founded in 2006 as AIG Rail. In May 2011, AIG Rail Services Inc. was purchased by Perella Weinberg Partners Asset Based Value Strategy Fund and transitioned to Flagship Rail Services LLC. In December 2013, Flagship Rail was purchased by Sumitomo Mitsui Banking Corp.