Short line railroad owner Genesee & Wyoming signed an agreement to buy Arizona Eastern Railway from Iowa Pacific Holding for $90.1 million in cash.
The Miami, Ariz., based unit has two rail lines operating more than 200 miles in the state’s southeast copper mining region and southwest New Mexico, and which are connected through use of 52 miles of Union Pacific Railroad’s tracks.
Arizona Eastern’s largest customer is Freeport-McMoRan Copper & Gold, which operates the largest North American copper mine and its smelter along that rail line. Cargoes handled by the railway include copper concentrate, copper anode, copper rod and sulfuric acid.
Rail Insight: Short Line Traffic
Under a long term pact, Arizona Eastern commits to specific service and track upgrades in return for guarantees for guarantees from Freeport-McMoRan.
The rail line, which has 45 employees and 10 locomotives, also serves other local customers that are mainly in mineral, agricultural and forest product industries.
G&W already operates 63 railroads in the U.S., Australia, Canada, the Netherlands and Belgium. The Arizona rail line deal amount is subject to adjustment for final working capital, while the acquisition is subject to customary closing conditions.
The companies expect to close on the deal by the end of September.
G&W also said its second quarter profit rose 51 percent from a year earlier to $31.1 million. Traffic on both rail lines in both periods rose 5.3 percent and freight revenue from those units grew 5.9 percent. Total revenue jumped 32 percent to $210 million within the same period.
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