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Jax Daily Record Tuesday, Mar. 28, 2017 2 months ago

Florida East Coast Railway sold to Mexican transportation company

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by: Mark Basch  Contributing Writer

A Mexican transportation company Tuesday agreed to buy Florida East Coast Railway Holdings Corp. from the private equity group that acquired the historic railroad 10 years ago.

GMéxico Transportes S.A. de C.V. (GMXT), a unit of Grupo Mexico, said it is buying FEC from funds management by Fortress Investment Group LLC in an all cash deal.

The amount of the sale was not announced, but several news reports put the value of the deal at $2.1 billion.

FEC is a 351-mile rail line running from Jacksonville to Miami that was originally built by Henry Flagler more than a century ago.

GMXT operates more than 6,200 miles of rail lines in Mexico and also has operations in Texas.

“The acquisition of FEC is an important strategic addition to our North American transportation service offering,” GMXT CEO Alfredo Casar said in a news release.

The company did not say how the acquisition will affect operations of Jacksonville-based FEC.

“The FEC team looks forward to working with GMXT to grow our business, execute our key strategic initiatives and take advantage of new opportunities,” FEC Chief Executive Jim Hertwig said in the news release.

The Fortress funds acquired publicly traded Florida East Coast Industries Inc., which also included commercial real estate developer Flagler, for $3.5 billion in 2007. Fortress split up the rail and real estate businesses into separate units after the acquisition.

Although relatively short in length, the railroad has long been considered an attractive property for businesses waiting for Cuban trade to open up, because FEC’s railroad connects with the Port of Miami and can provide freight access to Cuba.

At various times in the last decade, Fortress was rumored to be interested in an initial public offering for the railroad or a sale. Bloomberg News had reported in October that Fortress retained investment bankers to shop the railroad.

New York-based Fortress last month agreed to a $3.3 billion buyout by Tokyo-based technology conglomerate SoftBank Group Corp. SoftBank intends to continue operating Fortress as an independent subsidiary.

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