Eurotunnel snaps up rail freight operator for £31m

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The operator of the Channel Tunnel is buying Britain's third-largest rail freight operator from the transport giant FirstGroup for £31m.

Eurotunnel's acquisition of GB Railfreight is part of a plan to expand its European freight operation to meet expected growth in demand, which is rising as customers become increasingly aware of environmental issues. Eurotunnel said GB Railfreight would fit both geographically and in terms of customer type with its existing French freight subsidiary, Europorte France, enabling it to provide a "through" service using the Channel Tunnel.

"Eurotunnel has always been a major link between the UK and France," said Jacques Gounon, the chairman and chief executive of Eurotunnel. "The acquisition of GB Railfreight is a further expression of our commitment to the UK and of our confidence in the potential that it holds."

Britain has one of Europe's most developed freight markets, with growth averaging 4 per cent per year before the recession struck in 2008. It was also one of the first to liberalise, opening up to competition in 1996.

Eurotunnel's takeover of GB Railfreight is the second big change for the British rail freight market in recent years. In 2007, the German state rail company Deutsche Bahn bought English, Welsh and Scottish Railway and re-named it DB Schenker.

Across Europe, the market has been even more active. Groupe Eurotunnel picked up the French operations of Veolia Transport's freight business, while Société Nationale des Chemins de Fer Français (SNCF) bought the non-French divisions. Deutsche Bahn also bought Poland's PTK Holding and took a 49 per cent stake in Ferrovie Nord Cargo of Italy.

GB Railfreight, bought by FirstGroup in 2003, employs 299 staff and generated revenue of £56m last year.