(The Associated Press circulated the following on May 9.)
NEW YORK — Shares of railroads traded higher on Tuesday after CSX Corp., one of the nation’s larger operators, offered a bullish outlook for the next few years and a private equity group bought a Florida railroad company.
Shares of CSX rose $1.13, or 2.5 percent, to $47.03 in afternoon trading. Shares of eastern rival Norfolk Southern Corp. added $1.27, or 2.4 percent, to $54.63. Shares of competitor Union Pacific Corp., the nation’s largest railroad, gained $1.34 to $117.73, while western rival Burlington Northern Santa Fe Corp. advanced $1.89, or 2.1 percent, to $91.75.
The activity came after CSX revealed in a premarket disclosure its plans to buy back an additional $1 billion in company stock, hike its dividend by 25 percent and invest $6.4 billion in its operations over the next four years.
“These actions emphasize our confidence in the earnings power of CSX businesses as demand for our rail and intermodal services is robust and expected to grow,” said CSX Chairman and Chief Executive Michael Ward in a statement. Intermodal service involves moving freight between two or more modes of transportation, such as loading containers from rail cars to trucks for final delivery.
Besides the upbeat CSX forecast, acquisition activity also sent the sector higher. Florida East Coast Industries Inc., which operates a Class II freight railroad between Jacksonville, Fla., and Miami, said Tuesday that Fortress Investment Group LLC would take the company private for $62.50 per share, or about $2.2 billion in cash. Including debt and a planned dividend, the purchase price rises to $3.5 billion.
Shares of Florida East Coast Industries rallied $9.92, or 13.4 percent, to $84.12. Shares of similarly sized railroads followed. Shares of Genesee & Wyoming Inc. added 67 cents, or 2.4 percent, to $28.28, while shares of Kansas City Southern gained 87 cents, or 2.3 percent, to $39.23.
The rally extended across the border, as shares of Canadian National Railway Co. rose $1.18, or 2.3 percent, to $52.26, and shares of Canadian Pacific Railway Ltd. jumped 90 cents to $65.90.