RailWorks won't buy AAI rail car division

No reasons given for cancellation

Transportation

September 27, 2000|By Meredith Cohn | Meredith Cohn,SUN STAFF

RailWorks Corp., a Mount Washington-based transportation service company, said yesterday that it is backing out of a plan announced earlier in the month to buy AAI Corp.'s transportation division.

John G. Larkin, RailWorks chairman and chief executive officer, said in a statement that "the termination of discussions with AAI Corporation would serve the best interest of RailWorks Corporation and its shareholders."

No one at RailWorks, Cockeysville-based AAI, or AAI's parent company, United Industrial Corp., in New York, could be reached for comment last night.

Under the plan, AAI, once one of Maryland's fastest-growing defense companies, would have leased two buildings on its 60-acre campus to RailWorks. There, rail car components are constructed and overhaul work is done for transit systems including Maryland's Mass Transit Administration.

About 200 of AAI's 800 workers were scheduled to join RailWorks, which also had announced plans to hire another 100 workers if the business merited the investment.

RailWorks has 36 subsidiaries in North America and about 2,500 workers.

At the time, analysts said the sale might make AAI more attractive to potential buyers from the defense industry.

The company had recently won an Army contract to build small, pilotless planes that carry cameras used to identify targets and assess damage, and does about $185 million a year in defense business.

AAI created the transportation division in the early 1990s as part of a plan to lessen its dependence on U.S. defense contracts. It has since sold or spun off most other divisions.

United Industrial Corp.'s shares closed at $11.12, up 19 cents in trading yesterday. RailWorks shares closed at $8.53, up 3 cents.

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