OMAHA, Neb. (AP) — Norfolk Southern plans to buy a regional railroad it already operates from Cincinnati for $1.62 billion.
The deal announced Monday will give Norfolk Southern ownership of the busy 337-mile-long (542-kilometer-long) Cincinnati Southern Railroad that connects the Ohio city with Chattanooga, Tennessee. A Norfolk Southern subsidiary now leases the railroad and runs as many as 30 trains a day on it.
"The Cincinnati Southern Railway is a critical artery linking the Midwest and the Southeast and plays an important role in our powerful network," Norfolk Southern CEO Alan Shaw said.
As part of the deal, the railroad would acquire 9,500 acres (3,800 hectares) of land underneath the tracks and end any uncertainty about how much it would have to pay under future lease agreements. The U.S. Surface Transportation Board will review the deal, which also must be approved by Cincinnati voters.
Norfolk Southern is one of the nation's largest railroads and reported a nearly $1 billion profit in the third quarter. It operates about 19,500 miles (31,382 kilometers) of track in 22 Eastern states and the District of Columbia. The Atlanta-based railroad said it plans to use both cash on hand and borrow some money to finance the deal.
Cincinnati officials plan to use the proceeds from the sale to set up an infrastructure trust fund that will be invested and generate money to be used for future projects in the city.
Mayor Aftab Pureval said the sale will allow the city to "realize a substantial return on the investment and foresight of our predecessors."