G&W aquires RailAmerica

For discussion of the various Class III Lines of the Genesee & Wyoming Inc. Railroad Holding Co. short-lines. Their Class II holdings should be discussed in the relevant separate forums above.

Their website is here: GWRR.com
A list of their holdings is here: Wikipedia List

Re: Genessee & Wyoming buys RailAmerica

Postby kilroy » Tue Jul 24, 2012 1:35 pm

Interesting fact on the stickey thread about this. A majority of the RA stock is stll privately held so if the biggest shareholder is happy with the deal, then the courts should ignore the ambulence chasers. Then again the courts in this country are more than happy to give a platform to some out of touch plaintif to have his 15 minutes of fame.
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Re: Genessee & Wyoming buys RailAmerica

Postby Noel Weaver » Tue Jul 24, 2012 4:41 pm

CN9634 wrote:I would expect to see SLR units heading to St. Albans for work as such was the arrangement when both CV and GT were under CN (That being GT locos going to St. Albans for work). Certainly interesting times.

From a business perspective, this is no simple transaction. Actually, the STB has a tough job of looking into the Sherman act/Anti Trust Act at places where the G&W and RA both serve to see if a monopoly of service may form. Of course, Railroad's always have the card up their sleeves about this that they also compete with trucks. This seems to have been the umbrella solution to this problem for quite some time.

Will be interesting to see. Maybe those SD70M-2's on the FEC will become Orange?


Please be advised that the Florida East Coast has NO CONNEDTION WITH RAIL AMERICA period. Both are owned by Fortress Investments but are completely separate operations. Fortress saw the light last year and today the FEC no longer uses any manuals, rules or materials from Rail America. The FEC went back to writing its own rules and tilmetable too. NO! FEC engines will not become orange.

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Re: G&W eats RailAmerica

Postby mitch kennedy » Tue Jul 24, 2012 6:09 pm

G&W runs a VERY tight ship system-wide. Acquisitions are made virtually un-leveraged, until this one. Safety, ops, and finances are tightly run, and profitable. G&W stock is in the mid $50's per share, better than GM, Ford and GE! They have a mix of union and non-union lines, with ops being run out of Jax as well, but old-boy CSX folks are not in the mix. They have old-school railroaders but not the short-sighted type, more the kind that call you by your first name but you still say "sir" like old-school railroading was at its best. They will be no doubt tightening things up or spinning things off RA-wise...doubt they'd cast off existing GWRR properties as all pretty much are money-makers. Yes, I've been an employee of their's for 10 years, at a union job at that and they're not perfect but they beat the crap out of the other regional/shortline operators.
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Re: G&W eats RailAmerica

Postby mtuandrew » Wed Jul 25, 2012 11:48 am

The combined service area map: http://mms.businesswire.com/bwapps/medi ... 2744&vid=5 I see several areas where joint operations and mergers in all but name would make lots of sense, particularly in the Expanded Illinois, Expanded Ohio, Expanded Pacific, Expanded Canada (wish the Ottawa Valley hadn't been so quick to abandon!), and Expanded Southern groups.

Also, notice the distinct lack of the Florida East Coast - this sale frees up quite a bit of Fortress income for investment in All Aboard Florida.
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Re: G&W eats RailAmerica

Postby F-line to Dudley via Park » Wed Jul 25, 2012 12:27 pm

The New England/Quebec carriers all get tantalizingly close to touching each other; too bad there's still some paper barriers in the form of CN and PAS keeping them separated by short distances. Maybe something will be negotiable in the future for overhead rights, but they've still got a couple Class I's holding all the cards on nicely integrating that northeast network.
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Re: G&W eats RailAmerica

Postby mtuandrew » Wed Jul 25, 2012 12:50 pm

I agree. Further though, I suspect that out of all the regions, New England, Ontario, Quebec and the Maritimes will see the most major changes in railroad ownership and operations. It's easy to imagine the Irving Lines, GWRR and PWRR gathering even more track under their corporate wings, MM&A and PAR shedding more, and CN (and possibly CP, if Harrison can find the funding) doing some of both.
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Re: Genesee & Wyoming to acquire Rail America

Postby kevin.brackney » Fri Jul 27, 2012 1:14 am

In theory, GWI (OC) and RA (IORY) could connect at Columbus. Currently, the IORY does not operate through Columbus to connect the Midland Sub with the Logan Sub. The Logan Sub currently interchanges at Parsons (CSX) Yard. Traffic from the Midland Sub (grain, and ethanol trains from Bloomingburg along with other grain trains from the "Springfield Cluster") are interchanged with the CSX at Cooks, just east of Bloomingburg, on the Midland Sub. No trains run through from the Logan Sub to the Midland Sub, nor vice versa. The COUH (OC)interchanges at Parsons. IORY routinely runs local traffic between Washington Court House and Ashland Chemical at Grove City, with a significant amount of traffic from the Midland Sub being interchanged at Queensgate Yard (Cincinnati).

It will be interesting to see if there will be some operational changes made in Columbus as a result of this merger.
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Re: G&W aquires RailAmerica

Postby scharnhorst » Fri Jul 27, 2012 7:15 am

I wonder how this will affect lines that are owned 50/50 or owned between 3 or more party's with controlling interests?
no matter the weather or the country I'll still be trackside!
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Re: G&W aquires RailAmerica

Postby F-line to Dudley via Park » Sat Jul 28, 2012 12:46 pm

Didn't stop RailAmerica from buying up RailTex, ParkSierra/StatesRail, and Alcoa over the last 13 years, and I'm going to guess G&W smoothed that out amongst its minority partners before it made the bid. Per Wikipedia RA's only got 7 direct purchases on its carrier roster, so nearly all of them have been through this before when RA swallowed their prior parent companies. The number of carriers that could be potential problems are probably few and far between, and most likely not amongst the ones likely to benefit from these new contiguous or near-contiguous super-regions. There'll be spin-offs and sales and minority partner deals for sure, but it's pretty unlikely to be from the ranks of carriers with any real real coulda-been upside for this new conglomerate.
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Re: G&W aquires RailAmerica

Postby Jeff Smith » Sat Jul 28, 2012 1:43 pm

I've seen this in telecomm. Without any direct knowledge of RA's ownership structure, I imagine there's more than a few JV's (partnerships usually) out there, where the partnership interest that RA owns is just conveyed to G&W. If it's corporate, it's the stock ownership. There are different tax consequences based on the type (GP, LP, S-Corp, LLC and C-Corp). Some of the telecomms I've seen have had GP's and LP's in existence since the 80 where some Joe Blow owns 1% and will NOT sell.
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Re: G&W eats RailAmerica

Postby BrianS » Sat Jul 28, 2012 10:01 pm

I would be interested what they pay their engineers, as I am on for the NECR and will be following this closely.
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Re: G&W aquires RailAmerica

Postby biggboy » Sun Jul 29, 2012 1:09 pm

Brian I work for AGR and we were told this week by our GM and Trainmasters that no wage cuts, vacation cuts,etc.etc were going to happen. Local level management might get weeded out. This was per a conference call with RA-GW. I heard the local MNBR road earns $16/hr. If they were to cut wages 99% of the guys that work on AGR would probably leave because local industries are paying more per hour. Are ya'll union also?
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Re: G&W aquires RailAmerica

Postby rovetherr » Mon Jul 30, 2012 7:49 am

I wonder what this will mean for the ARDC? I know GWI consolidated much of their dispatching to the Ohio Central center after their experiment with contract dispatching didn't work out as planned. St. Albans has always been Escape Plan A for me, if the dispatchers get moved I guess I will have to look to our neighbors to the south.
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Re: G&W eats RailAmerica

Postby kevin.brackney » Wed Aug 01, 2012 7:53 am

mitch kennedy wrote:G&W runs a VERY tight ship system-wide. Acquisitions are made virtually un-leveraged, until this one. Safety, ops, and finances are tightly run, and profitable. G&W stock is in the mid $50's per share, better than GM, Ford and GE! They have a mix of union and non-union lines, with ops being run out of Jax as well, but old-boy CSX folks are not in the mix. They have old-school railroaders but not the short-sighted type, more the kind that call you by your first name but you still say "sir" like old-school railroading was at its best. They will be no doubt tightening things up or spinning things off RA-wise...doubt they'd cast off existing GWRR properties as all pretty much are money-makers. Yes, I've been an employee of their's for 10 years, at a union job at that and they're not perfect but they beat the crap out of the other regional/shortline operators.


Define "beating the crap out of." Should we expect to see improvements to the ROW, and better equipment? How will this affect our next contract negotiation? Yes, I've been a RailTex/RA (and union member) since 1996. Not disputing your claim; just looking for a little clarification. Wouldn't you have to have some intimate knowledge of RA's properties to make this comparison?
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Re: G&W aquires RailAmerica

Postby Jeff Smith » Wed Aug 01, 2012 8:50 am

Quick observation: price per share doesn't matter much without context. What's the total market cap? Has the share price grown over a period of time? Has it grown since the acquisition was announced? That's what I'd look from an investment perspective.

Some PR news: Genesee & Wyoming: RailAmerica acquisition would mean more growth, diversification in addition to more railroads

“The company would originate or terminate more than 4 percent of all U.S. carloads balanced across all North American Class Is,” said GWI President and Chief Executive Officer Jack Hellmann during the call.

...

The acquisition of RailAmerica’s 45 regionals and short lines in the United States and Canada would boost GWI’s railroad holdings to 108 in North American and 111 worldwide. In addition, GWI would manage 15,100 miles of track, including more than 13,000 in North America (versus a total of 7,600 miles now); handle 1,835,000 carloads annually (versus 995,000); employ 4,300 people (versus 2,500); operate 1,000 locomotives and 22,100 rail cars (versus 600 and 13,800, respectively); and generate $1.38 billion in annual revenue (versus $829 million).


I'd have to clarify w.the STB and I doubt it would since each railroad in the portfolio is considered separate, but their standard for Class I (per wiki) is $250m in operating revenue. I'd really have to look into the detail and maybe talk to G&W Inv Relations to see if any one railroad hits that mark. Nevertheless, I'd say on a whole G&W is pretty big ;-) !
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