Wisconsin, an upstart operator born out of American deregulation nine years ago, beat a management buyout team for Railway Express Services (RES), it was announced yesterday.
The existing management will remain in place at least until it has been evaluated by Wisconsin's executives. No big lay-offs are planned among the 800 staff, but the new owner will be looking for ways to cut costs in the loss-making service.
Although the price was not revealed when the Government announced the sale, the company is expected to make it known before US markets open tomorrow. Industry observers said most of the rolling stock has already been fully depreciated, and estimated that the price would be between pounds 20m and pounds 30m.
Wisconsin's consortium, North & South Railways, includes venture capital companies Berkshire Partners from Boston, Massachusetts, and Fay Richwhite of New Zealand.
British Rail's privatisation programme continues on Tuesday with the sale of the first three of 25 passenger franchises.
Eighty per cent of the business involves letters and parcels, but RES also has a contract to run the Royal train, though the carriages are owned by Railtrack. The rest of the business is running special excursions.
The Chicago-based company plans to invest in up to 30 new locomotives to replace the worst of the ageing fleet of 150 it has purchased, a third of which are undergoing maintenance at any given time. Wisconsin's US operations typically have just 10 per cent in the shop. The deal also includes 600 goods wagons.
Wisconsin picks up a 10-year contract with the Post Office. The Royal Mail is building a new rail terminal at Willesden, in north-west London, and will provide 64 electric cars which, like Underground trains, do not need locomotives. Wisconsin will operate them.
Wisconsin was founded in 1987 when a management buy-in led by veteran railwayman Ed Burkhardt bought 2,000 miles of track, 26 locomotives and 2,100 freight cars from the huge US Soo Line. Since then it has bought another 1,000 miles of track, most of it between lakes Superior and Michigan, making it the largest regional operator in the US. Its network links Chicago, Minneapolis and Canada's Sault Ste Marie.
Along with Berkshire and Fay Richwhite it also operates, and owns a 29 per cent stake in, New Zealand Rail. US analysts have rated the Nasdaq- listed company as a growth stock in an otherwise moribund sector. Last year, it more than doubled profits to $36.7m (pounds 24m) from $15.4m in 1993.