Regulatory Bodies Approve Watco's Purchase of Great Lakes Central Railroad
The Surface Transportation Board (STB) has approved Watco's acquisition of the Great Lakes Central Railroad (GLC), effective from September 28, 2023. The decision comes after a review process that began in May, following Watco's request to exempt the deal from STB review in March.
The acquisition of the 420-mile railroad in Michigan marks Watco's continued investment in the rail industry, as they have been an equity investor in the GLC since 2013. The STB's approval was based on additional information submitted by Watco in June.
The deal, however, comes with conditions. The STB has required Watco to keep all currently active GLC and Ann Arbor gateways open on commercially competitive terms. The operation of these gateways should also be subject to the cooperation of third-party interline partners in facilitating traffic movements via these existing gateways.
The STB's decision also comes amidst a change in its board. Rail regulator board member Primus was recently fired ahead of a potential merger decision, with reports suggesting Trump's involvement in the matter.
In light of the latest week's intermodal drag down on rail freight, the STB's decision could be seen as a push for railroads to focus on interline partnerships, as suggested by CPKC, rather than mergers. Notably, Berkshire Hathaway's Warren Buffett has stated that Berkshire will not bid for CSX or Norfolk Southern.
The STB initiated a review proceeding in May due to questions about the deal's eligibility for an exemption. The condition attached to the deal regarding gateways involving Great Lakes and the Ann Arbor railroads, both owned by Watco, is a part of the board's effort to ensure competition and cooperation in the rail industry.
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