Union Pacific gives CN Midwest rail access in exchange for ending NS merger opposition

CN ends opposition after securing track rights in Illinois and Missouri

Union Pacific and Canadian National Railway have reached a binding agreement that resolves CN’s opposition to Union Pacific’s proposed $71.5 billion acquisition of Norfolk Southern, the companies said Wednesday. Under the deal, CN will withdraw its objections to the merger in exchange for expanded track access and terminal ownership in the U.S. Midwest.

CN had pressed U.S. federal regulators in recent months to demand more information from the two railroads, urging the Surface Transportation Board in May to reject the amended merger application on the grounds that it omitted information needed to assess the deal’s competitive effects. The STB paused its review of the merger the same month, saying it needed more information.

MSI previously reported that Union Pacific filed a revised application with the STB in late April seeking approval for the deal after regulators rejected an initial filing in January as incomplete. The latest agreement with CN removes one of the most prominent competitive objections to the transaction.

Under the proposed settlement, CN would gain trackage rights to operate its trains on Union Pacific-owned lines between Tuscola, Illinois, and East St. Louis, Illinois, as well as rights to serve customers on the corridor between St. Louis and Kansas City, Missouri. CN would also gain access to certain shipper facilities where railroad options would be reduced as a result of the merger, and would acquire Norfolk Southern’s ownership interests in the Kansas City Terminal Railway Company and the Terminal Railroad Association of St. Louis.

The settlement agreement is contingent on approval from the Surface Transportation Board and the closing of the Union Pacific-Norfolk Southern merger, the companies said.

Union Pacific Chief Executive Jim Vena said the deal with CN aligns with the goals of his company’s merger to preserve and improve competitive options.

“This settlement agreement reinforces those commitments by giving expanded access and operating rights to a tough competitor,” Vena said.

The broader merger has drawn opposition from rail customers and rival carriers. The Surface Transportation Board’s review of the transaction, which was paused in May, will need to resume before the deal with CN — or the merger itself — can proceed.