Norfolk Southern to acquire Cincinnati Southern Railway assets for $1.6bn
Norfolk Southern Corporation, through its subsidiary Norfolk Southern Railway, has agreed to purchase all of the assets of the Cincinnati Southern Railway (CSR) for a cash consideration of around $1.62bn, in a move to strengthen its railway operations.
Under the transaction, the Atlanta-based transportation company will acquire a nearly 337-mile railroad laid between Cincinnati to Chattanooga. The deal also includes the acquisition of about 9,500 acres of land maintained and operated by Norfolk Southern.
The railroad line which sees around 30 trains per day traveling through it is expected to help Norfolk Southern eliminate future lease costs.
Alan H Shaw — Norfolk Southern President and CEO said: “The Cincinnati Southern Railway is a critical artery linking the Midwest and the Southeast and plays an important role in our powerful network that serves more than half the U.S. population.
“This agreement sets the framework for Norfolk Southern to own a core line in our network in perpetuity, allowing us to advance our strategic objectives of improving service, enhancing productivity, and creating an even stronger platform for accelerated growth, all while eliminating uncertainty around future control of the line and lease costs.”
Norfolk Southern, which is said to eliminate 15 million tons of annual carbon emissions by shipping through rail, plans to fund the deal through a mix of internal and external sources.
The City of Cincinnati is expected to leverage the proceeds from the deal to create an infrastructure fund for the benefit of Cincinnati citizens.
The transaction is anticipated to complete in the first half of 2024, subject to approval from the voters of Cincinnati and the US Surface Transportation Board.
Under a lease agreement expiring in 2026, the Cincinnati Southern Railway is currently owned by the City of Cincinnati and operated by the Cincinnati, New Orleans and Texas Pacific Railway Company (CNOTP), a fully-owned subsidiary of Norfolk Southern Railway.
Cincinnati Mayor Aftab Pureval said: “This is an historic opportunity to deliver great value to citizens of Cincinnati and realize a substantial return on the investment and foresight of our predecessors.
“We are fortunate that a number of events have brought us to this point and will provide for the transportation needs of our city for decades to come. This transaction marks a seminal moment for the City of Cincinnati, and I look forward to submitting it to voters for their approval.”