CP to sell major portion of DM&E line to Genesee & Wyoming

Canadian Pacific and Genesee & Wyoming Inc. (GWI) yesterday announced they executed an agreement through which CP will sell the west end of its Dakota, Minnesota & Eastern Railroad (DM&E) line to GWI for $210 million.

The west end encompasses about 660 miles of CP's operations between Tracy, Minn., and Rapid City, S.D.; Rapid City and Colony, Wyo.; and Rapid City and Dakota Junction, Neb. The route also includes connecting branch lines and other trackage between Dakota Junction and Crawford, Neb., that's leased to the Nebraska Northwestern Railroad. Customers on the line annually ship about 52,000 carloads of grain, bentonite clay, ethanol, fertilizer and other products.

The sale is expected to close by mid-2014, subject to Surface Transportation Board approval and other customary closing conditions. After the transaction closes, the new rail operation will be called the Rapid City, Pierre & Eastern Railroad, GWI officials said in a press release. The new short line would interchange with CP, BNSF Railway Co., Union Pacific Railroad and the Nebraska Northwestern.

GWI plans to hire about 180 people to staff the new railroad, many of whom would come from the pool of current west end line employees.

"We are excited to be working with CP to expand [our] rail operations into South Dakota, as well as into Wyoming, Minnesota and Nebraska," said GWI President and Chief Executive Officer Jack Hellmann.

The sale concludes a comprehensive strategic review process the Class I launched in December 2012, CP officials said. The railroad has operated the line since it assumed operational control of the DM&E in 2008.

The Class I will continue to own and operate about 1,900 miles of former DM&E trackage following the sale, which will benefit the ongoing transformation to make the railroad's network stronger for the entire customer base, CP officials said.

"There is a strong long-term franchise here and we are pleased to have found a partner in Genesee & Wyoming, which will maintain a high standard of customer service," said CP CEO E. Hunter Harrison.