Monday, August 15, 2016

Bulk Rail Freight and Intermodal Operator to be Acquired by Competitor

US Group Picks Up Company Offering Port Delivery Services
Shipping News Feature
US – Rail group Genesee & Wyoming (G&W), which last 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.

P&W, which was formed in the 1840’s and whose stated mission was to be the dominant railroad in southern New England, is headquartered in Worcester, Massachusetts and operates in that state and Rhode Island, Connecticut and New York contiguously with G&W’s New England Central Railroad (NECR) and Connecticut Southern Railroad (CSO). The company has a fleet of 32 locomotives operated by a staff of 140.

P&W also has numerous regional track rights agreements and carries a diverse mix of aggregates, auto, chemicals, metals and timber for customers in south eastern New England, handling approximately 43,000 carloads and intermodal units annually. 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.

Doubtless one of the attractions for G&W is the 45 acres of undeveloped waterfront land in East Providence, Rhode Island that was initially created as a deep water, rail served port through a $12 million investment and which G&W now expects to sell. Jack Hellmann, President and Chief Executive Officer of G&W, commented:

“The acquisition of P&W is an excellent strategic fit with G&W’s contiguous railroads, the New England Central and the Connecticut Southern. Following anticipated STB approval of the acquisition, our connectivity with the P&W enables us to realise substantial immediate cost savings, to share and optimise the utilisation of equipment and other assets, and to unlock significant new customer opportunities across sister G&W railroads as well as connecting partners at two Canadian Class I Railroads, two US Class I Railroads and two regional railroads.

”Our acquisition of the P&W will ultimately enhance the efficiency and customer service of rail in New England. We are excited to welcome P&W’s employees to G&W as we work together to provide safe, reliable and efficient rail service to our customers for the long term. We also look forward to working with our Class I partners, Amtrak and Metro-North Commuter Railroad to ensure a smooth transition of services and build upon the success of P&W’s current operations.“

G&W expects to fund the approximately $126 million acquisition through its revolving credit facility under which it had available capacity of $542 million as of June 30, 2016, additionally with funds potentially boosted by the sale of the undeveloped tranche of waterfront land. Upon approval by the Surface Transportation Board (STB), P&W would be managed as part of G&W’s Northeast Region, led by Senior Vice President Dave Ebbrecht.