The transportation arm of Grupo México, the country’s largest mining company, has reached an agreement to purchase Florida East Coast Railway, a deal reported at $2.1 billion.
The acquisition gives Grupo México control of the exclusive provider of freight rail service to ports in Miami, Palm Beach and the Everglades. Jacksonville-headquartered FEC owns 565km of track, running across the state’s east coast from Jacksonville to Port Miami and handling approximately 550,000 loads per year.
Grupo México, which has more than 10,000km of rail track in 24 Mexican states, also owns and operates the Texas Pacifico railroad running across the western half of Texas. Alfredo Casar, chief executive of GMéxico Transportes, Grupo México’s transportation arm, said the acquisition is “an important strategic addition to our North American transportation service offering” and will “significantly enhance the scope, scale and diversification of our service”.
FEC is currently owned by Fortress Investment Group, which purchased the railway as part of a $3.5 billion deal in June 2007. Jim Hertwig, FEC’s chief executive, said the group will work with Grupo México “to grow our business, execute our key strategic initiatives and take advantage of new opportunities”.
The deal, which is pending government approval, will be financed by $350 million in cash and $1.75 billion in debt. BBVA Bancomer and Credit Suisse served as financial advisors to Grupo México, while Barclays and Morgan Stanley advised FEC.