Genesee & Wyoming Inc. (NYSE: GWR)

CALGARY, AB and DARIEN, CT, Jan. 2, 2014 /PRNewswire/ – Canadian Pacific (CP)
(TSX:CP) (NYSE:CP) and Genesee & Wyoming Inc. (G&W) (NYSE: GWR)
announced today that they have executed an agreement pursuant to which
CP will sell the west end of its Dakota, Minnesota & Eastern (DM&E)
line to G&W for continued rail operations.

The west end encompasses approximately 660 miles of CP’s current
operations between Tracy, MN and Rapid City, SD; north of Rapid City to
Colony, WY; south of Rapid City to Dakota Jct., NE; and connecting
branch lines, as well as trackage from Dakota Junction to Crawford, NE,
currently leased to the Nebraska Northwestern Railroad (NNW). Customers
on the line ship approximately 52,000 carloads annually of grain,
bentonite clay, ethanol, fertilizer and other products. The new rail
operation will have the ability to interchange with CP, Union Pacific,
BNSF and the NNW. [map]

The asset sale is expected to close by mid-2014, subject to approval of
the U.S. Surface Transportation Board and satisfaction of other
customary closing conditions. Upon closing, the new railroad will be
named the Rapid City, Pierre & Eastern Railroad. G&W expects to hire
approximately 180 employees to staff the new company and anticipates
these employees will come primarily from those currently working on the
rail line.

The agreement with G&W concludes the comprehensive strategic review
process that was launched by CP on December 4, 2012. Canadian Pacific
has operated the rail line in this area since it assumed operational
control of the DM&E railroad in 2008 and will continue to own and
operate approximately 1,900 miles of former DM&E track following the
sale of the west end.

Under the terms of the definitive transaction agreements, the purchase
price is approximately USD $210 million, subject to certain adjustments
including the purchase of inventory, equipment and vehicles. For CP,
it is anticipated the sale will result in a net after-tax write down of
approximately USD $240 million, subject to closing adjustments, which
will be recorded in CP’s fourth quarter 2013 financial statements. The
transaction is cash positive for CP and the sale will not have a
material effect on anticipated future earnings. For G&W, it is
expected the transaction will generate annual revenues of approximately
$65 million and be immediately accretive to book and cash earnings per
share in 2014.

The sale is expected to benefit CP in its ongoing transformation to make
its network stronger for its entire customer base. For G&W, the
purchase is expected to add an important rail corridor with a strong
customer base and continued access to CP’s North American network.

“There is a strong long-term franchise here and we are pleased to have
found a partner in Genesee & Wyoming, which will maintain a high
standard of customer service,” said CP Chief Executive Officer, E.
Hunter Harrison. “South Dakota remains an important economic driver in
the Midwest and CP looks forward to working with G&W.”

Jack Hellmann, G&W’s Chief Executive Officer commented, “We are excited
to be working with CP to expand G&W’s rail operations into South
Dakota, as well as into Wyoming, Minnesota and Nebraska. Given G&W’s
commitment to safety, service and long-term infrastructure investment,
we believe this transaction will significantly benefit our customers,
the employees we plan to hire, the communities that we serve, and our
connecting Class I rail partners.”

Evercore served as exclusive financial advisor to CP on the transaction.

About Canadian Pacific
Canadian Pacific (TSX:CP)(NYSE:CP) is a transcontinental railway in
Canada and the United States with direct links to eight major ports,
including Vancouver and Montreal, providing North American customers a
competitive rail service with access to key markets in every corner of
the globe. CP is a low-cost provider that is growing with its
customers, offering a suite of freight transportation services,
logistics solutions and supply chain expertise. Visit www.cpr.ca to see
the rail advantages of Canadian Pacific.

About Genesee & Wyoming
G&W owns and operates short line and regional freight railroads in the
United States, Australia, Canada, the Netherlands and Belgium. In
addition, G&W operates the 1,400-mile Tarcoola to Darwin rail line,
which links the Port of Darwin with the Australian interstate rail
network in South Australia. Operations currently include 111 railroads
organized in 11 regions, with nearly 15,000 miles of owned and leased
track, 4,600 employees and over 2,000 customers. G&W provides rail
service at 35 ports in North America, Australia and Europe and performs
contract coal loading and railcar switching for industrial customers.

Note on Forward-Looking Information
This news release contains certain “forward-looking statements” within
the meaning of applicable securities laws relating, but not limited, to
G&W’s proposed acquisition of the west end of CP’s DM&E line, CP’s and
G&W’s operations, priorities and plans, anticipated financial
performance, business prospects, planned capital expenditures, programs
and strategies. These forward-looking statements also include, but are
not limited to, statements concerning expectations, beliefs, plans,
goals, objectives, assumptions and statements about possible future
events, conditions, and results of operations or performance.
Forward-looking statements may contain statements with words such as
“anticipate”, “believe”, “expect”, “plan” or similar words suggesting
future outcomes.

Undue reliance should not be placed on forward-looking statements as
actual results may differ materially from the forward-looking
statements. Forward-looking statements are not a guarantee of future
performance. Among other risks, there can be no guarantee that the
acquisition will be completed within the anticipated time frame or at
all or that the expected benefits of the acquisition will be realized.
By their nature, CP’s and G&W’s forward-looking statements involve
numerous assumptions, inherent risks and uncertainties that could cause
actual results to differ materially from the forward-looking
statements, including but not limited to the following factors: the
occurrence of any event, change or other circumstances that could give
rise to the termination of the purchase agreement; the outcome of any
legal proceedings that may be instituted against CP or G&W and others
following announcement of the purchase agreement; the inability to
complete the acquisition due to the failure to satisfy the conditions
to the acquisition; risks that the proposed transaction disrupts
current plans and operations; the ability to recognize the benefits of
the acquisition; legislative, regulatory and economic developments,
including regulation of rates; changes in business strategies; general
North American and global economic, credit and business conditions;
risks in agricultural production such as weather conditions and insect
populations; the availability and price of energy commodities; the
effects of competition and pricing pressures; industry capacity; shifts
in market demand; inflation;; changes in taxes and tax rates; potential
increases in maintenance and operating costs; labor disputes and
potential difficulties in employee retention as a result of the
acquisition; risks and liabilities arising from derailments;
transportation of dangerous goods; timing of completion of capital and
maintenance projects; currency and interest rate fluctuations; effects
of changes in market conditions; various events that could disrupt
operations, including severe weather, droughts, floods, avalanches and
earthquakes as well as security threats and governmental responses
thereto, and technological changes. The foregoing list of factors is
not exhaustive.

These and/or other factors are detailed from time to time in reports
filed by CP with securities regulators in Canada and the United States
and in reports filed by G&W with the SEC. Reference should be made to
“Management’s Discussion and Analysis” in CP’s annual and interim
reports, Annual Information Form and Form 40-F. Reference should also
be made to G&W’s Annual Report on Form 10-K for the year ended December
31, 2012. Readers are cautioned not to place undue reliance on
forward-looking statements. Forward-looking statements are based on
current expectations, estimates and projections and it is possible that
predictions, forecasts, projections, and other forms of forward-looking
statements will not be achieved by CP or G&W or will be delayed or
materially altered. Except as required by law, CP and G&W undertake no
obligation to update publicly or otherwise revise any forward-looking
statements, whether as a result of new information, future events or
otherwise.

SOURCE Canadian Pacific