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Genesee & Wyoming to pay $1.39 billion for RailAmerica

Genesee & Wyoming Inc. said the deal will strengthen its ability to serve its industrial customers and its railroad partners.

The Trucker News Services

7/23/2012

GREENWICH, Conn. — Genesee & Wyoming said Monday it will buy RailAmerica for about $1.39 billion in a deal that combines the two largest short line and regional rail operators in North America.

The combined company will have 108 railroads and the buyer expects it will put it in position to benefit once the U.S. economy recovers.

Greenwich, Conn.-based Genesee & Wyoming will pay $27.50 in cash for each share of RailAmerica Inc., which is based in Jacksonville, Fla. The price represents a premium of nearly 11 percent over RailAmerica's closing price of $24.81 on Friday.

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RailAmerica shares climbed 5.8 percent, or $1.44, to $26.25 in pre-market trading on Monday.

RailAmerica announced in May that it was considering strategic alternatives, including a possible sale. The deal price announced Monday represented a premium of more than 27 percent from RailAmerica's closing price of $21.55 before it made that announcement.

Genesee & Wyoming Inc. said the deal will strengthen its ability to serve its industrial customers and its railroad partners.

The U.S. Surface Transportation Board still must approve the deal. The companies say that could happen by the fourth quarter.

Genesee & Wyoming expects to close the deal via a voting trust as early as the third quarter and then fully integrate RailAmerica once it receives the regulatory approval.

It expects to pay for the deal and refinance existing debt with about $2 billion in new debt and $800 million in equity or equity-linked securities.

Kevin Jones of The Trucker staff can be reached for comment at kevinj@thetrucker.com.

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