Report: Genesee & Wyoming seeking partner or potential sale of company

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DARIEN, Conn. — Short line operator Genesee & Wyoming is seeking an investment partner or considering the outright sale of the company, according to a published report.

G&W, which operates 120 railroads in North America, Europe, and Australia, is in early talks with potential suitors, including Toronto-based Brookfield Asset Management, Bloomberg reported on Monday.

Neither G&W nor Brookfield responded to Trains requests for comment.

Brookfield Infrastructure Partners has deep pockets and is one of the world’s largest owners of transportation and utility infrastructure, including railroads, ports, and toll roads. The company could easily buy G&W outright if it wanted to, says independent rail analyst Anthony B. Hatch of ABH Consulting.

G&W, whose stock market value is around $4.9 billion, has a history of growth through acquisition of short line and regional railroads. The company did not score any deals in 2018, however, as prices rose and made potential acquisitions unattractive.

“They have said that the same high valuations that make it near impossible for them to continue to buy assets also make their very own assets more valuable,” Hatch says.

G&W executives have said that they would consider finding an investment partner for large acquisitions, Hatch says.

The Carlyle Group, a private equity firm, invested $350 million in G&W in 2012 to help fund G&W’s $2 billion acquisition of RailAmerica, for example.

G&W executives also have said that short line acquisitions are pricey, Hatch notes.

“The expensive deals issue is with valuation and return on investment, for the most part, not overall amount of dollars,” Hatch explains.

Last year, G&W executives said buying back the company’s stock was more attractive than other investment opportunities such as acquiring railroads or other transportation assets.

G&W is not the only company to reach the conclusion that short lines acquisition prices are high.

Fortress Transportation & Infrastructure Investors aims to sell the Central Maine & Quebec this year, CEO Joe Adams told an investor conference last week. Why? Short lines prices are no longer attractive, making future acquisitions unlikely, and the CM&Q is an odd duck as the lone remaining railroad in the company’s portfolio.

Fortress bought the former Montreal, Maine & Atlantic out of bankruptcy in 2014 in the wake of the Lac-Mégantic, Quebec, oil train disaster.

NEWSWIRETrains News Wire

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