Bloomberg the Company & Products

Bloomberg Anywhere Login

Bloomberg

Connecting decision makers to a dynamic network of information, people and ideas, Bloomberg quickly and accurately delivers business and financial information, news and insight around the world.

Company

Financial Products

Enterprise Products

Media

Customer Support

  • Americas

    +1 212 318 2000

  • Europe, Middle East, & Africa

    +44 20 7330 7500

  • Asia Pacific

    +65 6212 1000

Communications

Industry Products

Media Services

Follow Us

RailAmerica Sued by Investor Over Genesee Takeover

Aug. 7 (Bloomberg) -- RailAmerica Inc., the short-line railroad being bought by Genesee & Wyoming Inc. for $1.39 billion, was sued by a shareholder who contends investors will be shortchanged in the transaction.

Directors of RailAmerica, based in Jacksonville, Florida, have a duty to get the maximum price for the stock and should have sought more suitors, lawyers for KBC Asset Management NV contend in a lawsuit filed today in Delaware Chancery Court.

If the $27.50 per share takeover is completed, “it will result in RailAmerica’s investors losing their interest in the company through an inadequate sales process” and cause “irreparable harm” to shareholders, KBC alleged in the suit.

RailAmerica, which is controlled by Fortress Investment Group LLC and Greenwich, Connecticut-based Genesee, said in a statement July 23 that the buyout will combine the two largest short-line and regional rail operators in North America, running through 37 U.S. states.

“The company has been improperly valued and shareholders will likely not receive adequate or fair value for their RailAmerica common stock,” said investor Semyon Pesochinsky in a companion lawsuit also filed today in the same court.

KBC is asking a judge to stop the proposed deal, and to award legal fees.

Donia Crime, a spokeswoman for RailAmerica, didn’t immediately return a phone call seeking comment on the lawsuit.

Shares of RailAmerica rose 6 cents to $27.44 in New York Stock Exchange composite trading at 4 p.m. Genesee rose 1.76 percent to $65.39 on the NYSE.

The case is KBC v. RailAmerica, CA7755, Delaware Chancery Court (Wilmington).

To contact the reporter on this story: Phil Milford in Wilmington, Delaware, at pmilford@bloomberg.net

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net.

Please upgrade your Browser

Your browser is out-of-date. Please download one of these excellent browsers:

Chrome, Firefox, Safari, Opera or Internet Explorer.