Canadian National to Sell Rail Asset to Defuse Kansas City Southern Antitrust Concerns -- Update
May 26 2021 - 7:49AM
Dow Jones News
By Jacquie McNish
Canadian National Railway Co. is offering to sell a 70-mile
stretch of its Louisiana rail network to defuse antitrust concerns
as it seeks regulatory approval for its roughly $30 billion
agreement to merge with Kansas City Southern.
The two railroads jointly filed a motion with the U.S. Surface
Transportation Board Wednesday morning seeking approval for a
voting trust to acquire Kansas City Southern stock from its
shareholders. The STB's review of the proposed trust is the first
of a lengthy two-step regulatory process that requires the
regulator to ensure that major railroad mergers are in the public
interest and enhance competition.
Canadian National's main rail lines travel across Canada and
south into the U.S. through such major hubs as Chicago, Detroit and
New Orleans. Kansas City Southern routes extend from Illinois to
Southern Mexico. The two railroads operate nearby routes from Baton
Rouge to New Orleans that largely ship chemical products. The
railways share some customers on the route region.
"We believe our early commitment to eliminating the minimal rail
overlap and to laying out the case for a CN-KCS combination should
allow the STB to approve our voting trust," Canadian National's
Chief Executive Jean-Jacques Ruest said.
Canadian National would sell the Louisiana section if its
proposed merger is approved by the STB.
There have been no major railroad mergers in the U.S. for two
decades after a handful of industry combinations triggered
widespread complaints about poor service. Canadian Pacific Railway
Ltd. sought to break the deal gridlock with an agreement in March
to merge with Kansas City Southern for about $25 billion in cash
and stock, but it was outbid by its bigger competitor Canadian
National earlier this month. The STB's review of the Canadian
National and Kansas City merger is expected to last well into next
year.
Write to Jacquie McNish at Jacquie.McNish@wsj.com
(END) Dow Jones Newswires
May 26, 2021 08:40 ET (12:40 GMT)
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