(Reuters) –Aurizon Holdings Ltd announced Friday that it will buy One Rail Australia for $1.75 Billion. The company is looking to diversify its business from coal and increase bulk capacity. However, shares fell 7% due to concerns about earnings and the high cost of the purchase.

Aurizon Australia, Australia’s leading rail freight provider, stated the deal will increase Aurizon’s exposure to commodities. This would support its transition towards greener energy.

More than a third of Aurizon’s core earnings came from coal in fiscal 2021 https://www.aurizon.com.au/-/media/project/aurizon/files/investors/documents-and-webcasts/2021/2021-full-year-results/2021-aurizon-annual-report.pdf and it transports more than 200 million tonnes of metallurgical and thermal coal a year, according to its website https://www.aurizon.com.au/what-we-deliver/coal.

Andrew Harding, chief executive officer of Aurizon Bulk, stated that “the One Rail acquisition provides a stepchange for Aurizon Bulk in South Australia/North Territory region and supports the continued growth of non coal revenue in Aurizon portfolio.”

Aurizon will either spin-off ORA’s Queensland and New South Wales businesses after spending A$2.35B ($1.75B) from Macquarie’s asset management arm, and PGGM (the Dutch pension fund manager).

Both Macquarie Asset Management (PGGM) didn’t respond immediately to a request of comment.

RBC Capital Markets stated that the market will take Aurizon’s guidance that dividend payments would be lower than the 70%-100% ratio, as it is dependent on existing and new debt in order to finance the deal.

A brokerage also doubted the benefits of diversification given that non coal exposure will rise only to 14%, from 9%.

After dropping 6.9% intraday, Aurizon shares fell 4.5% to A$3.715 at 0150 GMT.

Aurizon, a Queensland company, stated that its bulk business will account for approximately 40% of haulage revenue following the sale and divestment.

ORA’s purchase, expected to generate A$220m in core earnings by 2021, is scheduled for completion by April.

($1 = 1.3392 Australian dollars)