Foster’s $382M Rail Deal Halted Over Price Fixing
PITTSBURGH – L.B. Foster Company has been dealt a major blow as the U.S. government has stepped in to block its acquisition of Portec Rail Products Inc. The move comes after allegations of antitrust charges and price fixing were raised.
According to the government, the acquisition as originally proposed would combine the two primary U.S. manufacturers of bonded insulated rail joints and two of only three U.S. manufacturers of polyurethane-coated insulated rail joints. This would lead to higher prices, lower quality, less customer service, and less innovation, the government claims.
The proposed acquisition would have seen Foster, a Pittsburgh-based company with total revenues of approximately $382 million in 2009, take control of Portec, another Pittsburgh-based company with total revenues of approximately $92.2 million in 2009. However, the government has intervened, requiring Foster to divest a West Virginia plant used in the development, manufacture, and sale of certain railroad joints to Koppers Inc.
The divestiture is seen as a way to remedy the competitive concerns alleged in the lawsuit. The plant in question is Portec’s Huntington, W.Va., facility, which manufactures all of Portec’s bonded insulated rail joints and polyurethane-coated insulated rail joints.
Koppers, a Pittsburgh-based company with total revenues of approximately $1.12 billion in 2009, will integrate the divestiture assets into its current operations to create a viable business involved in the development, manufacture, and sale of bonded insulated rail joints and polyurethane-coated insulated rail joints.
The proposed settlement has been filed in U.S. District Court for the District of Columbia and will be published in the Federal Register. The public will have 60 days to comment on the proposed settlement, with any written comments to be submitted to Maribeth Petrizzi, Chief, Litigation II Section, Antitrust Division, U.S. Department of Justice, 450 Fifth Street, N.W., Suite 8700, Washington, D.C. 20530.
The government’s intervention has dealt a significant blow to Foster’s plans, but it remains to be seen whether the company will appeal the decision. As the situation continues to unfold, one thing is clear: the rail industry is set for a major shake-up.
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Key Facts
- State: West Virginia
- Category: White Collar Crime
- Source: DOJ Press Release ↗
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