Caterpillar-owned diesel-electric locomotives manufacturer, Progress Rail, is set to buy Downer Group’s Australian freight operations for $109 million.
Around 360 people currently employed by Downer are expected to transfer to Progress Rail as part of the deal.
The sale includes Downer’s customer contracts, associated assets, and facilities located at Malaga (WA), Port Augusta (SA) and Clyde (NSW).
The two companies have worked together for almost seven decades, supplying and maintaining locomotives in Australia.
The sale of Downer’s freight business is still subject to conditions and is scheduled for completion in January next year.
Downer’s rail division will have more than $8 million of work-in-hand after the divestment of the freight rail business and the division remains on track to hit in annual financial targets.
“Downer is Australia’s leading provider of passenger rolling stock asset management services,” the group’s CEO Grant Fern said.
“The Waratah trains have established themselves as the best performing trains in Australia and we have formed a valuable strategic relationship with our Chinese partner, CRRC Changchun Railway Vehicles.
“We are currently working with CRRC to deliver more high quality passenger trains in Sydney and Melbourne.”