Railway giant CNG Railway has bought into the rail industry by buying up existing rail franchises, launching its own rail operations and expanding its presence on the continent, a move that is sure to boost the rail sector in the country.
The $3 billion deal to acquire the franchise from French company CNG Rail for up to 50% of the franchisees share was announced on Monday.
It comes amid a slowdown in the rail market, as new entrants and a strong global passenger market has seen demand for rail fall.
CNG’s first major acquisition, for a total of $2.8 billion in 2012, was for the franchise of the SNCF rail network.
In an effort to revive the sector, CNG will continue to operate its rail operations on a regular basis, with a number of rail franchisees to be bought out in the future.
The deal is expected to take place within the next year and will allow CNG to significantly increase its footprint on the rail network and diversify its offerings, the company said in a statement.
The CNG board approved the deal on Monday, after a board meeting held on Tuesday.
The board also approved the acquisition by the French company, which is known for its extensive network of rail and air transport.
The new deal comes amid an overall slowing of the rail business in Europe.
The company said the acquisition will be completed in 2020, adding that it expects to invest $2 billion to $3.5 billion in the new rail ventures.
The acquisition includes a joint venture between CNG and a consortium of Dutch-based companies that have invested around $3bn in CNG operations.
The sale will also include a new investment into a railway hub in Turkey, Cng Railway said.
The acquisition of the CNG franchise comes at a critical time for the rail infrastructure in Europe, as it is facing a slump in the world’s biggest economy and a growing threat of the “tipping point” as global demand continues to decline.
The sector is already experiencing a severe slowdown.
The global economy has slowed to its lowest level in more than three decades and freight volumes are falling.
The drop in global demand and the global economic slowdown have led to a slowdown of the global freight freight market.CNG said it will continue operating the C-Line, a major rail line connecting France with Luxembourg.
The C-line, which has more than 1,000 stations, will be operated by the CGN train company, a unit of French state-owned CGN.
C-Line’s future has been uncertain for some time, with several of the company’s existing train operations being sold to Chinese-backed CNR Group and the French railway operator CN Rail.
The rail company has struggled to find new ways to grow its business as it struggles to meet demand amid a global economic crisis.
The global freight market, however, is expected be a major driver of CNGs future growth.