CP to sell west end of DM&E to Genesee & Wyoming

Written by Jenifer Nunez, assistant editor

Canadian Pacific (CP) and Genesee & Wyoming Inc. (GWI) have executed an agreement pursuant to which CP will sell the west end of its Dakota, Minnesota & Eastern (DM&E) line to GWI for continued rail operations.


The west end encompasses approximately 660 miles of CP’s current operations between Tracy, Minn., and Rapid City, S.D.; north of Rapid City to Colony, Wyo.; south of Rapid City to Dakota Jct., Neb., and connecting branch lines, as well as trackage from Dakota Junction to Crawford, Neb., currently leased to the Nebraska Northwestern Railroad (NNW). Customers on the line ship approximately 52,000 carloads annually of grain, bentonite clay, ethanol, fertilizer and other products. The new rail operation will have the ability to interchange with CP, Union Pacific, BNSF and the NNW.

The sale is expected to close by mid-2014, subject to approval of the U.S. Surface Transportation Board and satisfaction of other customary closing conditions. Upon closing, the new railroad will be named the Rapid City, Pierre & Eastern Railroad. GWI expects to hire approximately 180 employees to staff the new company and anticipates these employees will come primarily from those currently working on the rail line.

The agreement with GWI concludes the strategic review process that was launched by CP on December 4, 2012. CP has operated the rail line in this area since it assumed operational control of the DM&E railroad in 2008 and will continue to own and operate approximately 1,900 miles of former DM&E track following the sale of the west end.

Under the terms of the definitive transaction agreements, the purchase price is approximately $210 million, subject to certain adjustments including the purchase of inventory, equipment and vehicles.

The sale is expected to benefit CP in its ongoing transformation to make its network stronger for its entire customer base. For GWI, the purchase is expected to add an important rail corridor with a strong customer base and continued access to CP’s North American network.

“There is a strong long-term franchise here and we are pleased to have found a partner in GWI, which will maintain a high standard of customer service,” said CP Chief Executive Officer, E. Hunter Harrison. “South Dakota remains an important economic driver in the Midwest and CP looks forward to working with GWI.”



Categories: Class 1, Shortline/Regional