STB to Review Acquisition of G&W

The U.S. Surface Transportation Board has put the brakes on the proposed acquisition of short line railroad operator Genesee & Wyoming by Brookfield Investment Partners.

The STB said it was imposing an indefinite hold on the $8.4-billion deal until it can decide if it wants to allow the normal exemption for an acquisition that does not involve two railroads, a Class I, or a deal that links rail lines.

“The board is considering the issues presented here, including whether the class exemption is appropriate for this transaction,” the STB said. “To provide sufficient time for the board to fully consider the issues presented, the exemption that is the subject of this proceeding will not become effective until further order of the board.”

Brookfield and G&W had sought to have the acquisition exempt from STB review. That exemption often occurs when a railroad is being purchased by a non-railroad company.

G&W operates 13,000 miles of track in 41 states, including the Ohio Central System in Ohio and Pennsylvania.

A railroad analyst quoted by Trains magazine said the STB action is not surprising given the scope of the transaction.

Todd Tranausky of FTR Transportation Intelligence said the exemption from STB review was intended to apply to small, straightforward cases such as a non-carrier buying a 30-mile short line.

Another rail analyst quoted by Trains, Anthony Hatch, expects the G&W acquisition to eventually win approval.

“I think that [Brookfield’s] case seems strong (it is a change of control, not a consolidation) but I am no lawyer,” he said. “I think this could be interpreted as the STB simply being cautious.”

The STB said it will accept public comment on the G&W acquisition through Aug. 21 with replied to those comments due by Sept. 5.

It also directed Toronto-based Brookfield and its investment partner, Singapore-based DIC, to provide status updates on review of the proposed transaction by the Committee on Foreign Investment in the United States.

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