Genesee & Wyoming Inc. (GWI) is about to add three more short lines to its growing portfolio. Today, the holding company announced it signed an agreement to acquire CAGY Industries Inc. for $78.4 million in cash.
Founded in 1975, CAGY owns the Columbus & Greenville Railway, Chattooga & Chickamauga Railway and Luxapalila Valley Railroad, which operate more than 280 miles of track and move more than 26,000 carloads annually.
GWI expects to close the acquisition and commence operations on June 1 pending customary closing conditions, including the expiration of a 30-day notice period required by the Surface Transportation Board for GWI to obtain authority to control CAGY. The final purchase price will be adjusted for working capital at closing. In addition, GWI agreed to pay contingent consideration up to $18.6 million after satisfying certain conditions over the next two years.
CAGY President and Chief Executive Officer Roger Bell will continue to head rail operations for the three short lines as part of GWI.
"The addition of CAGY will expand our already significant presence in the southeastern United States and further diversify our commodity base," said GWI CEO Jack Hellmann in a prepared statement.
Earlier this month, GWI acquired Rotterdam Rail Feeding, which provides short-haul rail and switching services at the Port of Rotterdam. GWI also owns and operates 48 regionals and short lines in the United States, Canada and Australia, and owns a minority interest in a Bolivian railroad.
Meanwhile, GWI also announced today its first quarter revenue increased 12.5 percent to $15.6 million compared with first-quarter 2007's total. Freight revenue rose 4.7 percent to $4 million primarily because average revenue per carload shot up 15.3 percent to partially offset a 9.1 percent decrease in carloads.
However, operating income declined 8.9 percent to $21.3 million and GWI's operating ratio went up 3.6 points to 84.9 because of adverse weather conditions, acquisition-related costs and a legal settlement.
Source: Progressive Railroading Daily News
