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9/6/2011    M&A



Short Lines & Regionals Article
Genesee & Wyoming completes Arizona Eastern acquisition



Short Lines & Regionals
On Sept. 1, Genesee & Wyoming Inc. (GWI) announced it completed a transaction to acquire the Arizona Eastern Railway (AZER) from Iowa Pacific Holdings L.L.C. for $90.1 million in cash, subject to an adjustment for final working capital.

AZER operates two lines totaling more than 200 track miles in southeast Arizona and southwest New Mexico that are connected by 52 miles of trackage rights over a Union Pacific Railroad line.

The short line primarily provides service to Freeport-McMoRan’s largest North American copper mine and the miner's smelter. GWI previously announced that in conjunction with the acquisition, AZER and Freeport-McMoRan entered into a long-term agreement under which the short line will provide specific service and track upgrades, and the miner will provide the railroad certain traffic guarantees.

The AZER acquisition makes GWI even more attractive as an investment candidate, according to a transaction analysis posted on Seeking Alpha’s website. GWI’s services support the mining sectors in Canada and Australia, so the company is directly related to investments in physical assets, the analysis states.

“GWI primarily makes its profit from hauling coal and agricultural products. This relationship with [Freeport-McMoRan] should give GWI an edge in acquiring hauling contracts when mines get opened in more and more remote areas of the world in the planet’s scramble for more and more natural resources,” the analysis states.

GWI now owns and operates 64 small railroads in the United States, Australia, Canada, Netherlands and Belgium.

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