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Japanese rail company Shin-Keisei bought

Megan Hernbroth
Apr 29, 2022
Illustration of a multi-colored train moving fast towards the viewer.
Illustration: Shoshana Gordon/Axios

Shin-Keisei, a high-speed rail operator in Japan, will be acquired by Keisei Electric Railway, a larger rail operator in the country.

Why it matters: Both railway companies have been struggling financially as Japan's population ages, the companies state in a letter to existing shareholders. The consolidation could be a preview of public transportation in countries with similar demographics.

Details: Keisei will be the singular owner of Shin-Keisei once the share exchange is completed, the letter states.

  • The exchange is expected to finalize by August 29 but was approved by both boards Thursday.
  • Shares of Shin-Keisei will convert to .81 shares of Keisei stock once completed.
  • The deal values Shin-Keisei at roughly $228 million, based on Keisei's stock value at close on Thursday. Shin-Keisei had a market cap of roughly $194 million at close on Thursday.
  • Keisei is currently a stakeholder in Shin-Keisei, owning roughly 44% of the company.

Context: Keisei operates several subsidiaries in logistics, hospitality and transportation. Adding Shin-Keisei would bolster its transportation offerings and operational rail lines.

  • Keisei lost 26.33 million yen (~$201,ooo) in fiscal year ending March 2022, but forecasts a rebound to profitability in 2023 in its shareholder letter.

The bottom line: The coronavirus pandemic has taken a toll on public transportation companies globally due to decreased ridership and increased costs associated with safety measures.

  • Look for more consolidation to come.
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