An affiliate of OmniTrax is acquiring Winchester & Western (W&W) Railroad in a deal valued at $105 million. The acquisition is expected to close in the third quarter, subject to regulatory approval by the Surface Transportation Board and customary closing conditions.
OmniTrax is a Denver-based privately held rail-focused transportation and logistics service. It provides rail services, terminal services, logistics, energy solutions, real estate, railcar storage and industrial development along its tracks. The acquisition of W&W expands its short-line rail services to East Coast cities, providing access to more than 100 million people for its customers, OmniTrax said.
"OmniTRAX has been growing at an average annual rate of 20-plus percent for the past five years and the acquisition of this strategic distribution hub is a deliberate step toward enhancing the continued growth and strength of our thriving network," said Kevin Shuba, OmniTRAX CEO. "Our expansion into these dynamic markets with a diverse, established customer base and strong regional economic partners offers tremendous growth potential and we have high expectations for economic impact and job production."
W&W, which is owned by Covia Holdings Corp. (NYSE: CVIA), operates in Maryland, New Jersey, West Virginia and Virginia. Covia's stock was up more than 1 percent on the news.
Founded in 1916 in the woods of West Virginia to move natural resources out of the area, W&W has grown to include two divisions today – the Virginia Division with 53 miles of track that moves more than 15,000 loads per year, and the New Jersey Division, which has 47 miles of track and transports more than 11,000 loads per year.
Both divisions have connections with CSX Transportation and Norfolk Southern Railway lines.
OmniTrax plans to leverage its investment in Precision Scheduled Short Line Railroading to "strengthen W&W's performance, service, growth and safety," the company said.
W&W owns approximately 470 railcars, which will transfer to OmniTrax under the terms of the deal.
"Today's announcement is another key step in the actions we are taking to execute our strategy to optimize our asset base and maximize cash flow," Richard Navarre, chairman, president and chief executive officer of Covia, said. "As we know from working with them for many years, OmniTrax is an ideal candidate to further enhance the value of the W&W. They have a long track record of successfully operating logistical assets, and by partnering with them on this transaction, we will be able to meaningfully improve our capital structure, as well as take an important step in improving our structural costs by better balancing our railcar fleet with demand."
Covia, which is also heavily invested in mineral-based and material solutions for industrial and energy markets, just announced a sale of Calera, an Alabama lime processing facility, to Mississippi Lime Company for $135 million.
At the time, Navarre said the sale was intended to drive down debt "and drive stockholder value."
Covia's stock was at $1.67 in mid-day trading, down from $17.90 a share on July 23, 2018.
Navarre took over Covia earlier this year after the resignation of CEO Jenniffer Deckard following a board decision to go in a "different leadership direction." Navarre was chairman at the time.
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