An $8.4B buyout is a bet that trains could be the next autonomous trucks

The railroad company Genesee & Wyoming will go private in a $8.4B sale to international investors, a sign that railroad companies are back on track.

July 2, 2019

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.

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