Fortress to buy RailAmerica for $640 million
Wednesday November 15, 10:06 am ET
NEW YORK (Reuters) - RailAmerica Inc. (NYSE:RRA - News) , the largest U.S. short-line railroad operator, said on Wednesday that it agreed to be bought by investment firm Fortress Investment Group LLC for about $640 million.
Fortress will pay $16.35 per share, a 32 percent premium to the company's most recent trading price of $12.38 on the New York Stock Exchange.
The news sent RailAmerica shares sharply higher. In early morning trading on the New York Stock Exchange, they were last up $3.34, or about 27 percent, at $15.72.
Industry analysts have predicted consolidation in the United States' 500 short lines, which were sold off by the big railroads during the hard times of the 1980s.
Boca Raton, Florida-based RailAmerica, which operates 42 railroads and 7,800 miles of track in the United States and Canada, took a charge for a restructuring in June that included job cuts and a reorganization into three business units.
Including debt, the deal with Fortress is worth about $1.1 billion, RailAmerica said.
Fortress, which has private equity funds, hedge funds and alternative investment funds, has filed for an initial public offering.
Morgan Stanley & Co. advised RailAmerica on the transaction while Houlihan Lokey Howard & Zukin Financial Advisors provided a fairness opinion to the Board of Directors of RailAmerica.
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