Ferromex in negotiations to acquire FEC

http://www.cnbc.com/2017/03/27/reuters- ... urces.html" onclick="window.open(this.href);return false;

Mexico's Ferromex is nearing a deal with Fortress to acquire Florida East Coast.

Strictly speaking, it's not FerroMex but the FerroMex parent, Grupo México.

Grupo México is a conglomerate whose core is copper mining. They're the 3rd largest copper miner in the world, in fact, and own ASARCO (f/k/a American Smelting and Refining Company, the old Copper trust) and Southern Peru Copper. FerroMex is a JV between GMex and UP which operates the Chihuahua-Pacifico and Pacifico-Norte franchises. They also own 100% of Ferrosur, operates the Tehuantepec Railway and pretty much everything else south of Mexico City.

Sounds like they're trying to diversify away from mining; they just bought a stake in an airport operator in Mexico.

Ferromex is the operator of the South Orient, a one time Santa Fe line that is now State owned. It would appear that the property is pretty much FRA Class 1 (10mph) - and it's interchange with Ferromex at Presidio is closed account a bridge there over Rio Bravo burning (torched?). But the road has gained some traffic from fracking sand movements, and the State is committed to "patching it up" to FRA Class 2 (25 mph).

http://www.txdot.gov/inside-txdot/divis ... rient.html" onclick="window.open(this.href);return false;

I'm skeptical about how much experience Ferromex gains from operating this "sticks in the sagebrush" outfit to qualify them to operate a truly top-notch railroad property, but then "the die is cast".

Is it at all possible that the acquisition could, in part, be an acquisition of talent? If management at all levels is left in place at FEC that talent can be tapped to help the parent turn around and raise quality of operations in other divisions.

You have a worthy point, Mr. Gold.

The "diff" though is that FEC has a going business; and I must really question if Pacifico has such. They lost the interchange with Ferromex at Presidio as the fire made them now subject to "detourage" over the UP (albeit a minority owner of Ferromex) to interchanging at El Paso.

But it will be.interesting to watch this all play out.