Grupo Mexico to Buy Florida East Coast Railway
28 Marzo 2017 - 7:08PM
Dow Jones News
By Anthony Harrup
MEXICO CITY -- Mexican mining and railroad company Grupo Mexico
SAB has agreed to buy Florida East Coast Railway Holdings Corp. in
a $2.1 billion deal, expanding its transport operations in the U.S.
with the acquisition of the 351-mile railway.
Grupo Mexico, which operates Mexico's Ferromex and Ferrosur
railways through its transport unit GMXT, said Tuesday that the
acquisition will complement its operations in Texas and increase
the reach and scale of its North American rail operations.
GMXT will use $350 million in cash and take on $1.75 billion in
debt to finance the transaction, which requires government
authorizations before closing.
FEC, based in Jacksonville, Fla., is owned by funds managed by
affiliates of Fortress Investment Group LLC, operates along the
east coast of Florida, serving the ports of Miami, Everglades and
Palm Beach and handling some 550,000 railcars a year.
The acquisition will increase earnings before interest, taxes,
depreciation and amortization, or Ebitda, at Grupo Mexico's
transport division by about 20% to $930 million, based on 2016
earnings, the company said. The division's net debt-to-Ebitda ratio
will be about 1.8 times after the financing.
Grupo Mexico is one of the world's biggest copper mining
companies, and the leading rail freight operator in Mexico, where
it competes with Kansas City Southern de Mexico and other smaller
lines.
The acquisition is in addition to GMXT's plan to invest $2
billion over five years.
Grupo Mexico shares were down 1.5% early Tuesday on the Mexican
stock exchange.
Although the FEC price looks expensive compared with similar
companies, "in the longer term we think this is a positive and
strategic operation...that should bring benefits to the company,"
Grupo Financiero Banorte said in a report.
Write to Anthony Harrup at anthony.harrup@wsj.com
(END) Dow Jones Newswires
March 28, 2017 12:53 ET (16:53 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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