Ferromex’s owner nears deal to acquire Florida East Coast Railway


The owner of Ferrocarril Mexicano (Ferromex), Mexico’s largest railroad operator, is nearing a deal to acquire Florida East Coast Railway for more than $2 billion, including debt.

The potential deal shows that Ferromex’s parent, Mexican mining conglomerate Grupo Mexico , is now seeking to apply its railroad operating expertise to foreign assets after dominating the railway freight sector. The acquisition would come at a sensitive time for relations between the United States and Mexico, following a pledge by U.S. President Donald Trump to renegotiate the North American Free Trade Agreement and tighten immigration controls. Grupo Mexico has prevailed in an auction for Florida East Coast Railway and is now negotiating final terms with the U.S. regional railroad’s owner, Fortress Investment Group LLC

If the negotiations are completed successfully, a deal could be announced as early as this week, the people added, asking not to be identified because the sale process is confidential. Fortress declined to comment. Ferromex, Grupo Mexico and Florida East Coast Railway did not immediately respond to requests for comment.

Based in Jacksonville, Florida East Coast Railway operates a 351-mile (565-km) freight rail system located along the east coast of Florida. Fortress took Florida East Coast Railway private in 2007 for $3.5 billion. Fortress, an investment firm with $69.6 billion in assets under management as of the end of December, agreed last month to sell itself to Japan’sSoftBank Group Corp for $3.3 billion.

Grupo Mexico, one of the world’s largest copper producers, together with Kansas City Southern de Mexico and Ferrovalle, control more than 72 percent of the Mexican rail freight market. Grupo Mexico and Kansas City Southern de Mexico together have a 75 percent stake in Ferrovale. Earlier this month, Mexico’s antitrust watchdog criticized Grupo Mexico and Kansas City Southern de Mexico for using their rail freight market share to fix prices, restrict supply and impede access to their networks.

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