10 September 2007
L.B. Foster Will Use DM&E Profits to Expand
United States of America - L.B. Foster Co. says it plans
to plow most of its profits from the sale of the Dakota, Minnesota & Eastern into acquiring other companies and has already
identified "eight to ten" potential acquisitions. All are in the railroad construction area and annual revenues ranging from
$20 million (Foster's minimum threshold) to $100 million. Foster, an equity owner of DM&E for 21 years, will also direct some of
its new cash flow into repayment of $35 million in debt and possibly the buyback of shares.
Foster will receive an initial $151.5 million upon closing of the sale of DM&E to Canadian Pacific and two additional payments if
DM&E's long-planned extension into the Powder River Basin coalfields is completed - $41.6 million when construction
begins and up to $84.2 million when a certain volume of coal tonnage has been moved.
Lee B. Foster, the company's chairman, and Stan Hasselbusch, president and CEO, discussed its acquisition strategy in a conference call
with analysts. Noting that some companies now on the market are amply priced, Hasselbusch commented, "We will not overpay for any
one company just to get the deal done."
Canadian Pacific announced 5 Sep 2007 that it had agreed to acquire DM&E for $1.48 billion in cash and subsequent
payments of $350 million and $750 million tied to the proposed new coal line.
In a prepared statement at that time, Lee Foster commented: "This is a wonderful outcome. We were privileged to be a part of
the formation of the DM&E in 1986 and to witness and participate in its growth. [DM&E President] Kevin Schieffer's leadership
as well as the determination and imagination of the management team and the board of directors of the DM&E have resulted in a
success story unparalleled in modern railroading."
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