STB green lights G&W purchase of P&W Railroad

The U.S. Surface Transportation Board has approved a petition from Genesee & Wyoming Inc. to acquire the Providence & Worcester Railroad Co., subject to certain conditions, according to a filing from the agency.    The U.S. Surface Transportation Board has approved a petition from Genesee & Wyoming Inc. to acquire the Providence & Worcester Railroad Co. (P&W), according to a filing from the agency.
   The STB approval is subject to “the employee protective conditions in New York Dock Railway—Control—Brooklyn Eastern District Terminal, 360 I.C.C. 60 (1979),” and conditional on G&W agreeing not to “take or fail to take any actions that would adversely impact the ability of Springfield Terminal to interchange traffic with CSX Transportation, Inc. at Barbers Station in Worcester, Massachusetts in violation of applicable law or the P&W Grant of Trackage Rights, as amended, dated June 30, 1989,” the board said.
   The New York Dock rules requires railroads to give notice of “proposed changes to be effected by [a] transaction” when “contemplating a change or changes in its operations, services, facilities, or equipment as a result of a transaction” that may affect employees.
   G&W in August agreed to acquire Worcester, Mass.-based P&W for $126 million ($25 per share of common stock), and the acquisition is expected to close in fourth quarter 2016, pending shareholder approval.
   P&W, which connects with G&W’s New England Central Railroad (NECR) and Connecticut Southern Railroad, operates over 163 miles of owned track and 350 miles under track access agreements in southeastern New England. The railroad also connects with CSX, Norfolk Southern Corp., Pan Am Railways, Pan Am Southern, the Housatonic Railroad, and the New York and Atlantic Railroad, as well as Canadian National and Canadian Pacific via NECR.
   In addition, the railway has exclusive freight access on Amtrak’s Northeast Corridor between New Haven, Conn., and Providence, R.I., and trackage rights on MTA Metro-North Railroad, Amtrak and CSX between New Haven, Conn., and Queens, N.Y.
   G&W projects P&W will generate approximately $35 million in revenues and earnings before interest, taxes, debt and amortization (EBITDA) of $12 million, including $8 million in immediate overhead and operational cost savings. In the medium term, the company anticipates additional operational efficiencies and commercial opportunities will generate an additional $5 million in EBITDA over the following two to three years.