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Home / News & Reviews / News Wire / Grupo Mexico to acquire FEC NEWSWIRE

Grupo Mexico to acquire FEC NEWSWIRE

By | March 28, 2017

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FXEastCoast
FXEastCoast
An artist’s mock-up shows a Ferromex locomotive leading a Florida East Coast train at St. Augustine, Fla.
Photo illustration by Drew Halverson
JACKSONVILLE, Fla. – GMéxico Transportes S.A. de C.V., the transportation business unit of Grupo México, and the Florida East Coast Railway Holdings Corp. have entered into a purchase agreement to acquire FEC in an all cash transaction for an undisclosed value.

FEC President and CEO Jim Hertwig says, “The FEC team looks forward to working with [GMéxico Transportes] to grow our business, execute our key strategic initiatives, and take advantage of new opportunities.” The railroad, now owned by affiliates of Fortress Investment Group LLC, serves a diverse mix of intermodal, aggregate, auto, chemicals, metals and lumber customers, handling about 550,000 loads per year.

The sale does not affect All Aboard Florida or its Brightline passenger service, which remains with Fortress.

Grupo México subsidiary Ferromex operates more than 6,200 miles track covering major industrial and commercial zones in the country. It serves eight seaports and six border rail crossings, handling more than 1.4 million loads per year.

“The acquisition of FEC is an important strategic addition to our North American transportation service offering. Our acquisition of the FEC will significantly enhance the scope, scale and diversification of our service,” Alfredo Casar, president and CEO of GMéxico Transportes, says. “We are excited to welcome FEC to our transportation team as we work together to provide safe, reliable and efficient rail and trucking services to our customers.”

New York-based Fortress, a subsidiary of Japan’s SoftBank Group Corp., also owns the Central Maine & Quebec Railway, which is not included in this deal.

For more information on Florida East Coast and the Brightline passenger startup, see the January 2015 and November 2016 issues of Trains.

14 thoughts on “Grupo Mexico to acquire FEC NEWSWIRE

  1. Nice theory KWG. I personally don’t agree that EHH plans to spin off the New Orleans line.

    And while I agree that there’s a certain natural affinity between BNSF and the DFW-Meridian “Speedway”, the Shreveport interchange is extremely important to UP for supporting the SoCal-DFW-Atlanta-(Charlotte) domestic intermodal premium service lane (with NS).

  2. I could see EHH’s CSX spinning off the CSX line from Atmore, Alabama to Tallahassee to Jacksonville. If UP could pick up that line, there would be the New Orleans to Atmore gap, but that is not impossible to overcome. Throw some bucks at EHH’s CSX to get trackage rights and UP would have a transcontinental.

  3. I wonder why they would ay so much money to start private passenger service only to abandon it just before start-up. Odd.

  4. Uncle Pete, being a minority owner in Ferromex, looks like all they’ll need to complete a true coast-to-coast, super long-haul railroad is to start piecing together a route from lines CSX will be spinning off using the FMX banner as their agent, then start run-throughs! I’m also confident there’s enough mileage east of the Mississippi via Class III’s to allow a breaking of the eastern duopoly by assembling a cohesive rail line, even if putting some rail-banked properties back in shape is required!

    UP is no slouch; why await the outcome from Hunter’s experiment at CSX to forge ahead with the “coast to coast to coast” (Atlantic/Pacific/Gulf)/”country to country to country” (NAFTA) dream. BNSF, with BH’s deep pockets, can easily outbid the loser once Hunter’s merger plans materialize for NS. Using Ferromex as a front to pick off FEC is a sound beginning just incase NS doesn’t see the future in regards to the final round of consolidations under the Trump administration.

    Besides, the NS-KCS Meridian speedway is most aligned to BNSF out west I do believe, not UP. Why wouldn’t NS/BNSF/KCS be a natural??(!!)

    Anyone would be kidding themselves to not believe UP had a hand in this decision to procure FEC. The time to strike is while the iron is hot. Hunter’s started the ball rolling and this move by FMX/UP could add momentum to the final realignment for the 21st century NAFTA railroads of the future. Long, fast hauls, the anthem of precision railroading incarnate; all else to the regional/short-lines.

  5. Forgot a couple of commas in the sentence below: “BNSF, with BH’s deep pockets, can easily outbid the loser, once Hunter’s CSX merger plans materialize, for NS.

  6. Sammy Risjan,
    Nope, the UP/CP “Transcon” was most definately not a “Transcon”, but they sure called it that. It was more “Transconish” than transcon

  7. IT IS NOT FERROMEX that is buying FEC. It is Grupo Mexico, the larger parent of Ferromex (UP being the smaller parent). Therefore, UP has no direct connection to this transaction.

  8. Mr. Streeter:

    My point was only this: one can be sure that UP, with a significant position in Ferromex in conjunction with Grupo Mexico, has no-small vested interest in helping shape the upcoming mergers affecting the Class 1’s (for which I am sure such realignments are bound to happen now that EHH is at CSX – and looking to “right-size”: the physical plant). Knowing CSX already has a strangle hold on the FL market, less FEC’s east coast direct-route lane, then it would have seemed natural for NS to compete for the FEC franchise. But with their hands full in their own “right-sizing”, and income stream down, they possibly could not have swallowed FEC at this juncture.

    My subjective view is that Uncle Pete certainly had a hand in strategizing “what’s next for North American rail?” decision making, and Grupo Mexico offered the perfect “partner” (albeit the larger of the two in Ferromex) that could help preserve all options for becoming that true “transcom” once Hunter finalizes his plans for CSX’s future marriage.

    Most respectfully, thanks for noting my misuse of Ferromex vice Grupo Mexico in my initial post.

  9. FEC has always been innovative and “light on its feet”. It was a survivor when politics and unions were against their survival. FerroMex? You cannot take a badly run business and put it in charge of a well run business and expect a well-run solution.
    Sell your stock.

  10. Why are we allowing a third world country to acquire a major US corporation, a vital link in our transportation system?

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