Genesee & Wyoming, an American railroad freight company, announced earlier this week that it will be taken private in an $8.4B sale to a Canadian investment company and a Singaporean sovereign wealth fund.
This valuation is off the rails
As the freight landscape experiences an e-commerce overhaul, many large railroads are moving away from running small trains frequently and toward running large ones less often.
So this buyout — a 50% premium on the railroad company’s share prices at the start of the year — is a big, bold bet that railroads will continue to make money.
Will trains beat trucks?
Ballooning valuations at self-driving truck companies like Starsky Robotics and TuSimple make autonomous trucking seem like the next big thing.
But the high-profile failure of Otto, Uber’s self-driving truck startup, shows autonomous trucks may still be a long way off from making money.
Revamped railroads, on the other hand, already seem to be on the right track: Genesee, which owns 120 railroads, has gone on an acquisition spree in recent years — and the company’s shares rose 8.7% yesterday after the acquisition announcement.