Mar 12, 2019

Freight railroad owner with $5 billion market cap considers sale

Dan Primack, author of Pro Rata

Illustration: Aïda Amer/Axios

Genesee & Wyoming (NYSE: GWR), a Darien, Conn.-based freight railroad owner and leasor with a market cap of nearly $5 billion, is considering a sale of all or part of itself, per Bloomberg. Potential suitors include Brookfield Asset Management.

Why it matters: This reflects how railroads have been winning back market share from trucking companies, which have been stymied by driver shortages and new driver regulations, plus the glut of capital raised for infrastructure funds (i.e., prospective buyers).

  • Pricing: The company's stock is up 16.9% so far in 2019, although over half of that came after yesterday's Bloomberg report. That said, it remains below trading levels from just last fall.

The bottom line: "Genesee & Wyoming has a history of deals with private investors. In 2012, Carlyle Group LP agreed to invest as much as $800 million in the company to enable it to acquire RailAmerica. In 2016, Genesee & Wyoming bought Glencore Rail and concurrently sold a 49 percent stake in that business to ... Macquarie Infrastructure." — Gillian Tan & Scott Deveau, Bloomberg

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