One Equity finds Progress in railroads

The private equity arm of JPMorgan Chase has agreed to acquire Progress Rail Services, a subsidiary of publicly-traded Progress Energy, in a transaction valued at $405m.

One Equity Partners, one of two private equity firms affiliated with the financial services giant JPMorgan Chase, has agreed to purchase Progress Rail Services, an integrated railroad services company, from parent company Progress Energy in a transaction valued at $405 million (€305 million).

The transaction is expected to close within 90 days.

Progress Energy was formed in 2000 through the $5.3 billion combination of Florida Progess and California Power & Light. As part of the transaction, the new company was required to sell its non-utility assets, including Progress Rail, a process which was stalled for several years as Progress was unable to find a buyer.

Progress chairman and chief executive officer Bob McGehee noted in a statement: “It was critical for our company and our shareholders to ensure that we received appropriate value for our investment in the business. We accomplished that with this sale.”

For the nine months ended September 30, 2004, the rail unit generated sales of $816 million and income from continuing operations of $17 million according to documents filed with the Securities and Exchange Commission.

Over the past several months, One Equity has been an active buyer and seller of assets. The private equity firm recently acquired telecom provider Westcom Corporation less than two months after its purchase of the oncology pharmaceutical business of Bristol-Myers Squibb. That same month, One Equity sold its stakes in two companies:  US medical group Medex for $925 million, generating a reported return of 5 times its initial investment, and market data firm Moneyline Telerate for $175 million. In January 2005, Petters Group Worldwide agreed to buy One Equity portfolio company Polaroid for approximately $425 million.

One Equity Partners was established in 2001 by former Citicorp Venture Capital president Richard Cashin. The firm manages over $2 billion of investments and commitments on behalf of JPMorgan Chase, its parent organisation. In September 2004, the Wall Street Journal reported that One Equity may at some point raise an independent fund, in which JPMorgan would be an investor.