Tuesday, July 24, 2012

Top Story

RailAmerica sold to Genesee & Wyoming for $1.39 Billion

Genesee & Wyoming signed an agreement to purchase RailAmerica for $1.39 billion, uniting the two biggest short line railroads on the continent. The deal, which must be sanctioned by the U.S. Surface Transportation Board, will close at the end of 2012 at the earliest.

Genesee will pay $27.50 a share for the company, and will fund the existing debt with $2.3 billion in debt financing from Bank of America, and $800 million of equity financing from the Carlyle Group.

"It certainly is a bigger transaction than we've seen Genesee engage in, but they were able to get attractive financing and they were able to refinance some of their existing debt," said Allison Landry, a New York-based Credit Suisse analyst, to Bloomberg. "I don't see this as them over-levering to do this transaction."

RailAmerica shares increased 9.9 percent to $27.27 at 1:01 p.m. on Monday, while Genesee gained 0.1 percent to $56.06, after being down 7.6 percent this year.

After the acquisition of RailAmerica, Genesee will have a total of 111 railroads, 108 of them in North America, along with 4,300 employees.

For more of the Bloomberg story: bloomberg.com

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