Florida East Coast Industries, Inc.
Florida East Coast Industries, Inc. has entered into a definitive merger agreement with private equity funds managed by affiliates of Fortress Investment Group LLC under which Fortress will acquire FECI in an all-cash transaction valued at USD 3.5 billion.
Florida East Coast Industries will pay a special dividend of USD 21.50 per share in cash and in the merger shareholders will receive USD 62.50 in cash for each share of FECI common stock they hold. The combined dividend and merger consideration equal USD 84.00 per share and represent a 13.3% premium to the NYSE closing price of USD 74.13 on May 7, 2007 and a 31% premium to the average closing price over the last 60 trading days. The total value of the transaction, including FECI’s existing debt and the special dividend, is approximately USD 3.5 billion.
Adolfo Henriques, Chairman, President and Chief Executive Officer of FECI, said: "Our focus has always been about maximizing shareholder value. The value created by this transaction is a direct result of our employees’ dedication, commitment and hard work over many years. We look forward to working together with Fortress to continue to build our businesses."
The merger agreement was unanimously approved by FECI’s Board of Directors. The closing of the transaction is subject to customary closing conditions, including receipt of regulatory approvals and the approval of the holders of a majority of the outstanding shares of FECI common stock. The parties presently anticipate consummating the transaction during the third quarter of 2007. Upon completion of the transaction, FECI will become a privately held company, and its common stock will no longer be publicly traded.
FECI plans to discuss this transaction on its previously scheduled 2007 1st quarter earnings conference call on Wednesday, May 9, 2007 at 10:00 a.m. Morgan Stanley acted as financial advisor to FECI and provided an opinion to the Board of Directors of Florida East Coast Industries that the merger consideration is fair to FECI shareholders from a financial point of view. Greenberg Traurig, P.A. acted as legal advisor to FECI and Skadden, Arps, Slate, Meagher & Flom LLP acted as legal advisor to Fortress.
Florida East Coast Industries, Inc., headquartered in Jacksonville, FL, conducts operations through two distinct businesses, Flagler Development Group (Flagler), its commercial real estate operation, and Florida East Coast Railway, LLC (FECR). Flagler owns, develops, leases and holds in joint ventures, approximately 8.6 million square feet of Class-A office and industrial space, as well as an additional 1,916,000 square feet under construction. Flagler space consists of Class-A office and industrial properties, primarily in Jacksonville, Orlando and South Florida counties of Palm Beach, Broward and Miami-Dade.
In addition, Flagler provides construction, consulting, third party brokerage and property management (includes Flagler’s wholly-owned portfolio, as well as approximately 10.5 million square feet for third parties) services and owns 846 acres of entitled land in Florida, which is available for development of up to an additional 15.9 million square feet and Flagler owns approximately 3,089 acres of other Florida properties. FECR is a regional freight railroad that operates 351 miles of mainline track from Jacksonville to Miami and provides intermodal drayage services at various terminals.
