This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Canadian Pacific To Sell West End Of Its Dakota, Minnesota & Eastern Line To Genesee & Wyoming

Genesee & Wyoming Inc. (NYSE: GWR)

CALGARY, AB and DARIEN, CT, Jan. 2, 2014 /PRNewswire/ - Canadian Pacific (CP) (TSX:CP) (NYSE:CP) and Genesee & Wyoming Inc. (G&W) (NYSE: GWR) announced today that they have executed an agreement pursuant to which CP will sell the west end of its Dakota, Minnesota & Eastern (DM&E) line to G&W for continued rail operations.

(Photo: http://photos.prnewswire.com/prnh/20140102/MM39721-a) (Photo: http://photos.prnewswire.com/prnh/20140102/MM39721-b)

The west end encompasses approximately 660 miles of CP's current operations between Tracy, MN and Rapid City, SD; north of Rapid City to Colony, WY; south of Rapid City to Dakota Jct., NE; and connecting branch lines, as well as trackage from Dakota Junction to Crawford, NE, currently leased to the Nebraska Northwestern Railroad (NNW). Customers on the line ship approximately 52,000 carloads annually of grain, bentonite clay, ethanol, fertilizer and other products.  The new rail operation will have the ability to interchange with CP, Union Pacific, BNSF and the NNW. [ map]

The asset sale is expected to close by mid-2014, subject to approval of the U.S. Surface Transportation Board and satisfaction of other customary closing conditions.  Upon closing, the new railroad will be named the Rapid City, Pierre & Eastern Railroad.  G&W expects to hire approximately 180 employees to staff the new company and anticipates these employees will come primarily from those currently working on the rail line.

The agreement with G&W concludes the comprehensive strategic review process that was launched by CP on December 4, 2012. Canadian Pacific has operated the rail line in this area since it assumed operational control of the DM&E railroad in 2008 and will continue to own and operate approximately 1,900 miles of former DM&E track following the sale of the west end.

Under the terms of the definitive transaction agreements, the purchase price is approximately USD $210 million, subject to certain adjustments including the purchase of inventory, equipment and vehicles.  For CP, it is anticipated the sale will result in a net after-tax write down of approximately USD $240 million, subject to closing adjustments, which will be recorded in CP's fourth quarter 2013 financial statements.  The transaction is cash positive for CP and the sale will not have a material effect on anticipated future earnings.  For G&W, it is expected the transaction will generate annual revenues of approximately $65 million and be immediately accretive to book and cash earnings per share in 2014.

The sale is expected to benefit CP in its ongoing transformation to make its network stronger for its entire customer base.  For G&W, the purchase is expected to add an important rail corridor with a strong customer base and continued access to CP's North American network.

1 of 3

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
SYM TRADE IT LAST %CHG

Markets

DOW 18,034.93 +208.63 1.17%
S&P 500 2,100.40 +19.22 0.92%
NASDAQ 4,994.6020 +62.7870 1.27%

Partners Compare Online Brokers

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs