Government authorities approve Watco's purchase of Great Lakes Central Railroad
The Great Lakes Central Railroad (GLC), a 420-mile railroad in Michigan, has been acquired by Watco, following approval from the Surface Transportation Board (STB) in the United States. This acquisition marks a significant expansion for Watco, who have been an equity investor in the GLC since 2013.
In March, Watco sought to have its acquisition of the GLC exempt from STB review, a common practice in straightforward shortline railroad deals. However, in May, the STB initiated a review proceeding due to questions about the deal's eligibility for an exemption. The STB's decision to approve the deal, effective from September 28, was based on additional information provided by Watco in June.
The STB's approval came with a condition. Watco is required to maintain all currently active GLC and Ann Arbor gateways open on commercially competitive terms. The condition also states that the gateways' operation should be subject to the cooperation of third-party interline partners in facilitating traffic movements via these existing gateways.
Interestingly, the latest week has seen intermodal drag down rail freight, potentially impacting the operations of the newly acquired GLC.
Meanwhile, in a separate development, the STB has fired rail regulator board member Primus ahead of a potential merger decision. This move could signal a shift in the regulatory landscape for railroads in the United States.
Elsewhere, Warren Buffett has announced that Berkshire will not bid for CSX or Norfolk Southern, indicating a change in strategy for the prominent investor in the rail industry.
CPKC, another player in the rail industry, has suggested that railroads should focus on interline partnerships rather than mergers, aligning with the cooperative approach required by the STB's condition for the Watco-GLC deal.
This complex web of acquisitions, regulations, and strategic shifts in the rail industry promises an interesting future for rail transportation in the United States.
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