Genesee & Wyoming to acquire Providence and Worcester for $126 million
Written by Kyra Senese, Managing Editor
Providence and Worcester Railroad
Genesee & Wyoming Inc. (GWI) announced Aug. 15 that the company plans to acquire Providence and Worcester Railroad Company (P&W) for $126 million at $25.00 per share.
The acquisition is pending the approval of P&W shareholders and is set to wrap up in the fourth quarter of 2016.
P&W operates in Rhode Island, Massachusetts, Connecticut and New York and is headquartered in Worcester, Mass., neighboring with GWI’s New England Central Railroad (NECR) and Connecticut Southern Railroad (CSO).
GWI officials predict that P&W could bring in about $35 million in revenue and $12 million of earnings before interest, taxes, depreciation and amortization, including $8 million of operational cost savings and immediate overhead.
The company expects to fund the approximately $126 million acquisition through its revolving credit facility, which had available capacity of $542 million as of June 30.
Following the approval from the Surface Transportation Board (STB), P&W would be managed as part of GWI’s Northeast Region, headed by Senior Vice President WDave Ebbrecht. GWI officials say the addition of P&W to the company’s inhabitance along the east coast strengthens GWI’s ability to serve Class 1 partners and customers in New England, which GWI says is a highly competitive rail market focused on quick, efficient and safe rail service.
“The acquisition of P&W is an excellent strategic fit with [GWI’s] contiguous railroads, the New England Central and the Connecticut Southern,” said President and CEO of GWI Jack Hellmann. “Following anticipated STB approval of the acquisition, our connectivity with the P&W enables us to realize substantial immediate cost savings, to share and optimize the utilization of equipment and other assets, and to unlock significant new customer opportunities across sister [GWI] railroads.”
Hellmann added that the acquisition would also bring GWI connecting partners at two Canadian Class 1 railroads, two U.S. Class 1 railroads and two regional railroads.
“We look forward to working with our Class 1 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,” Hellmann said.
Approximately 140 P&W employees facilitate rail service with 32 locomotives along 163 miles of owned track and on 350 miles under track access agreements. P&W also operates with exclusive freight access over Amtrak’s Northeast Corridor between New Haven, Conn., and Providence, R.I., and trackage rights over Metro-North, Amtrak and CSX, among several others.
Handling about 43,000 carloads and intermodal units annually, P&W caters to a variety of aggregates, auto, chemicals, lumber and metals customers on the east coast. The company also offers rail service to three ports—Providence, Davisville and New Haven, as well as a U.S. Customs bonded intermodal terminal in Worcester, Mass. The intermodal terminal accepts inbound intermodal containers for distribution throughout New England.
GWI also plans to sell 45 acres of undeveloped Rhode Island waterfront land in East Providence, which was originally purchased for $12 million by P&W to be a deep water, rail served port.
