JOINT venture partners Genesee & Wyoming Inc and Wesfarmers announced on February 14 that they had 'entered into a definitive agreement' for the sale of Australia Railroad Group's operations in Western Australia to Queensland Rail and Babcock & Brown for A$1·3bn.

Under the deal, which has been under negotiation since mid-2005, train operations and infrastructure will be split. QR is paying A$446·5m for ARG's operations, including 121 locos, over 2000 wagons and 820 staff, which will be merged into its open access business unit QR National. Babcock & Brown is paying A$853·5m for WestNet Rail's 43-year lease of the 5000 route-km network.

GWI Chairman & CEO Mortimer B Fuller III explained that 'the value of the business to others in the Australian infrastructure and transportation sectors is greater today than the value that we could create for our shareholders over the long term.'

QR National is keen to expand its activities in competition with Pacific National, and has been looking for access to terminals in all the state capitals. QR sees a natural fit between the bulk grain hauls on Western Australia's 1067mm gauge network and its own heavy haul coal operations, but ARG also runs an intermodal train between Perth, Adelaide and Melbourne six times a week.

GWI is to retain the Australia Southern operations in South Australia that it acquired in 1997, together with ARG's stake in the Asia-Pacific Transport Consortium which owns and operates the Alice - Darwin line; these account for 15% of ARG's turnover. GWI has agreed to buy for A$20m Wesfarmers' 50% stake in the Adelaide-based business, which will be renamed Genesee & Wyoming Australia Pty Ltd.