The deal takes the company private, with each share of stock receiving $112 cash. [See “Genesee & Wyoming sold in $8.4 billion deal,” Trains News Wire, July 1, 2019.] As a result, the company ceased trading on the New York Stock Exchange prior to today’s opening of the market.
“This transaction is an excellent outcome for all G&W stakeholders,” Genesee & Wyoming CEO Jack Hellmann said in a press release. “For our customers, employees, and Class I partners, the long-term investment horizon of Brookfield and GIC is perfectly aligned with the long lives of G&W railroad assets. We look forward to building on G&W’s track record of safety, service excellence and commercial growth as we become an important component of a portfolio of global infrastructure assets.”
G&W operates 113 short lines in 42 U.S. states and four Canadian provinces. It also has operations in Europe and Australia, although the company is in the process of selling the Australian operation to its minority shareholder [see “G&W to sell stake in Australian operations as it goes private,” Trains News Wire, Aug. 2, 2019.]
Westgate and Lockman, are your comments based on previous BI and GIC behavior with rail investments?
There might me a few sales to Class I’s, but the current Management Trend Of The Month is to strip operations to only the most lucrative traffic in order to hype OR. Anything less lowers stock prices in the current market. Adding non-core assets further dilutes stock price and makes you a sitting duck for “investment groups” who strip out assets, pass the proceeds to the Group, and leave the desiccated corpse behind them a few later.
More likely, about half to two thirds of the lines will be ransomed off to local transportation authorities and other non-knowledgeable parties, who will blissfully amble along “preserving local economies” until the line’s infrastructure finally plays out and major capital outlays are required. I suspect G&W will eventually reduce itself to a operating entity for hire, and get out of the ownership of rail lines themselves in all a but a few cases.
Next up: G&W firesale to the Class I’s!
I hope this is a good long term deal. It gives one pause to remember how railroads once were a reflection of their leaders from Hill and Harriman to Budd and Claytor.
BI & GIC are now free from the stock holders looking over their shoulders demanding more returns on investments. BI & GIC can now make short & long term investments while gaining more satisfied satisfied.