Rail group Genesee & Wyoming (G&W), which previous year bought the UK’s second largest rail freight operator, Freightliner, has announced it has agreed to acquire bulk and intermodal operator Providence and Worcester Railroad Company (P&W) for $25.00 per share, or approximately $126 million assuming P&W shareholder acceptance of the offer in the fourth quarter of 2016 and subject to the usual closing conditions.
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The company expects the acquisition to unlock significant cost savings through overhead, operational, and long-term network efficiencies as well as to generate significant new commercial opportunities.
The acquisition would enhance G&W’s service to customers and Class Is in New England, G&W officials said.
P&W interchanges with G&W’s New England Central Railroad (NECR) and Connecticut Southern Railroad, as well as with CSX, Norfolk Southern Corp., Pan Am Railways, Pan Am Southern, the Housatonic Railroad and the NY and Atlantic Railroad, and also connects to CN and Canadian Pacific via NECR. The railroad company has 32 locomotives across 163 miles of owned track and more than 350 miles of track under access agreements.
The acquisition is expected to close in the fourth quarter of 2016. (G&W) will acquire Providence and Worcester Railroad Co.
It serves a mix of aggregates, automotive, chemicals, metals and lumber customers in southeastern New England, handling approximately 43 000 carloads and intermodal units annually.
GWI also plans to sell 45 acres of undeveloped Rhode Island waterfront land in East Providence, which was originally purchased for $12 million by P&W to be a deep water, rail served port.
G&W (NYSE: GWR) is paying $25 for each share of Providence and Worcester (Nasdaq: PWX), up by more than half from the stock’s closing price Friday. P&W also has exclusive freight access on Amtrak’s Northeast Corridor between New Haven, Conn., and Providence, R.I., and trackage rights over Metro-North and Amtrak. In addition, P&W provides rail service to three ports (Providence, Davisville and New Haven) and to a US Customs bonded intermodal terminal in Worcester, Massachusetts that receives inbound intermodal containers for distribution in New England.
In the first year of operation post-acquisition, G&W officials anticipate P&W would generate $35 million in revenue.
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G&W expects P&W will require approximately $3 million of annual capital expenditures and have depreciation and amortization expense of approximately $3 million.
