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By Rhiannon Hoyle

Aurizon Holdings Ltd. said it will buy One Rail Australia from Macquarie Group Ltd.’s asset management arm for 2.35 billion Australian dollars (US$1.76 billion).

The acquisition will boost the rail freight operator’s bulk business as it seeks to diversify away from coal haulage, and follows a goal announced by the company earlier this year to double its earnings from the bulk market over the coming decade.

“The One Rail acquisition delivers a step change for Aurizon Bulk as a new entrant in the SA [South Australia] and NT [Northern Territory] region, and supports the ongoing growth of non-coal revenue in the Aurizon portfolio,” said Chief Executive Andrew Harding.

One Rail comprises bulk rail haulage and general freight assets in South Australia and the Northern Territory, the 2,200 kilometer Tarcoola-to-Darwin railway line, and East Coast Rail, a haulage business in New South Wales and Queensland.

Aurizon, which already has substantial operations in New South Wales and Queensland, said it will commit to an enforceable undertaking with the Australian Competition and Consumer Commission to divest the East Coast Rail, or ECR, business following the completion of the deal, and that it will seek to do so via a demerger or trade sale. Until then, the East Coast Rail business will be operated independently of Aurizon with a separate chief executive and management team, the company said.

“The ECR divestment commitment is to address potential competition concerns from the ACCC arising from the transaction, and a final decision on the form of divestment will be based on delivering the best value outcome for Aurizon shareholders,” said Aurizon.

The company will aim to complete the deal by April, 2022, and offload the East Coast Rail business during the 2022 calendar year, it said.

Write to Rhiannon Hoyle at rhiannon.hoyle@wsj.com

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