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Genesee & Wyoming to acquire nine Ohio Central Railroad System short lines

Genesee & Wyoming Inc.'s (GWI) railroad roster soon will increase from 52 to 61. Today, the company announced it signed an agreement to acquire the Ohio Central Railroad System (OCR), which operates nine short lines, for $219 million in cash.

GWI also would pay contingent consideration of about $25 million after satisfying certain conditions. Expected to close in the fourth quarter, the deal is subject to customary closing conditions and approval from the state of Ohio to transfer an operating agreement for one of the railroads.

Founded in 1988, OCR owns nine short lines that combined operate more than 400 miles of track. The deal includes the Ohio Central Railroad Inc., Ohio Southern Railroad Inc.; Columbus and Ohio River Railroad Co.; Youngstown Belt Railroad Co.; Youngstown & Austintown Railroad Inc.; Warren & Trumbull Railroad Co.; Mahoning Valley Railway Co.; Pittsburgh & Ohio Central Railroad; and Aliquippa & Ohio River Railroad.

The nine short lines move about 140,000 carloads and generate about $70 million in revenue annually.

"The Ohio Central Railroad System is a valuable regional franchise whose nine railroads serve a diverse customer base in southern Ohio, northern Ohio and western Pennsylvania," GWI Chief Executive Officer John Hellmann in a prepared statement.

GWI owns and operates 52 regionals and short lines in the United States, Canada, Australia and the Netherlands, and owns a minority interest in a Bolivian railroad.

Meanwhile, GWI also reported second-quarter financial results today. Revenue jumped 21.9 percent to $152.7 million (while same-railroad revenue increased 10 percent), operating income rose 39.2 percent to $29.7 million and net income soared more than 40 percent to $15.4 million compared with second-quarter 2007 totals.

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More News from 8/4/2008