Canadian Pacific has agreed to sell the west end of its Dakota, Minnesota & Eastern line, which spans 660 miles of CP-operated rail and connects branch lines currently leased to Nebraska Northwestern Railroad, to Genesee & Wyoming for $210 million.
The sale, which must be approved by the U.S. Surface Transportation Board, is anticipated to close by mid-year. G&W has said the section, which will be operated by a new company, Rapid City, Pierre & Eastern Railroad, will be staffed by 180 new employees.
"We are excited to be working with CP to expand G&W's rail operations into South Dakota, as well as into Wyoming, Minnesota and Nebraska,” Jack Hellmann, G&W's chief executive officer, stated. “We believe this transaction will significantly benefit our customers, the employees we plan to hire, the communities that we serve, and our connecting Class I rail partners."
CP sees 62,000 carloads of grain, ethanol, fertilizer and other products annually on the section of rail, according to a press release. The sale is the result of a strategic review, which was initiated by CP in early December.
"There is a strong long-term franchise here, and we are pleased to have found a partner in Genesee & Wyoming, which will maintain a high standard of customer service," CP’s CEO, E. Hunter Harrison, said in a statement. "South Dakota remains an important economic driver in the Midwest and CP looks forward to working with G&W."
According to industry analyst Cowen and Co., STB approval of deal is expected to go through.