PITTSBURG, Kan. — Watco Companies has purchased the rail assets of Dow Inc., a Michigan-based chemical company, the two organizations announced Monday. The $310 million deal includes rail operations at Freeport and Seadrift, Tex.; St. Charles and Plaquemine, La.; and Fort Saskatchewan and Prentiss in Alberta.
Earlier this spring, Bloomberg Business reported that Dow was selling off its rail infrastructure and focusing on chemical production in a move that reflects a trend throughout the petroleum industry to rid itself of company-owned rail lines. “Today’s announcement is part of an on-going review of our ownership of non-product producing assets and is driven by our commitment to apply a best-owner mindset to everything we do,” said Jim Fitterling, chairman and chief executive officer of Dow. “It aligns to Dow’s strategy to continue to grow our core businesses in a capital-efficient manner. The transaction will liberate cash from our balance sheet that we will use to pay down debt and invest in our core value-generating businesses.”
Dan Smith, chief executive officer of Watco, said the railroad company will be working closely with Dow to maintain service at all of its plants. “We are grateful for the confidence Dow has shown in Watco by trusting us with this critical role. This represents a revolutionary approach to industrial in-plant rail operations and we’re proud to help Dow create value for many years to come.”
The transaction is expected to close in the fourth quarter of 2020. More than a dozen Dow employees and management of approximately 400 contract workers will transition to Watco upon close of the transaction, according to a press release.