Jul 2 2010
RailAmerica (NYSE: RA) announced that it has reached an agreement to acquire Atlas Railroad Construction Company (Atlas) and related assets for $21.5 million in cash plus closing adjustments for working capital, which are estimated to be approximately $2.5 million.
The transaction is expected to close July 1, 2010. Founded in 1954, Atlas is a railroad engineering, construction, maintenance and repair company operating primarily in the U.S. Midwest and Northeast. Atlas provides railroad construction services principally to public-transit agencies, industrial customers, and short line and regional railroads.
RailAmerica President and CEO John Giles said, "We expect the next several years to see a dramatic increase in spending on railroad infrastructure driven by government stimulus programs and increased investments by North American railroads upgrading and improving their rail lines. Acquiring Atlas, a quality company with established relationships in the transit and freight rail sectors, positions RailAmerica to benefit directly from this spending."
"We believe that RailAmerica will create new opportunities for Atlas to grow its business by expanding into regions where RailAmerica's railroads already have a presence and by providing new services. We also expect to realize cost savings from this combination by leveraging the best practices of each organization." Giles concluded, "With this transaction, we have started to implement our acquisition strategy, a key corporate priority that complements our organic growth. We continue to work to identify additional value creating opportunities."
For the next twelve months, RailAmerica estimates Atlas will generate approximately $25 million in revenue, $3.5 million in operating income and $2.1 million in depreciation and amortization. RailAmerica intends to use cash on hand to finance the purchase.
"I am pleased and proud for Atlas to join the RailAmerica family," said Bill Stout, President of Atlas. RailAmerica expects to retain the Atlas brand and keep the headquarters in western Pennsylvania.
Source: http://www.railamerica.com/