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While its proposed Elgin, Joliet & Eastern Railway Co. acquisition remains under federal and public scrutiny in the United States, Canadian National Railway Co. has completed an acquisition in Canada.

The Class I has landed a deal to acquire Quebec Railway Corp.’s (QRC) three principal railroad subsidiaries and the company’s rail-freight ferry operation for $41.5 million.

The railroad subsidiaries are: the 221-mile Chemin de fer de la Matapédia et du Golfe (CFMG), which interchanges with CN in Rivière-du-Loup, Quebec; the 196-mile New Brunswick East Coast Railway, which interchanges with CN in Moncton Yard; and Ottawa Central Railway, which interchanges with CN in Coteau, Quebec.

CN also acquired Compagnie de gestion de Matane Inc., a shuttle boat-rail freight service on the St. Lawrence River between Matane and Baie-Comeau, Quebec. The rail ferry can handle up to 25 freight cars and connects with CFMG in Matane.

Under the transaction, CN has purchased 540 track miles it formerly owned in eastern Ontario, eastern Quebec and northern New Brunswick. CN sold the lines to QRC in the late 1990s and has held a minority equity interest in the ferry operation since its 1975 start-up.

"The operations we're buying are important to CN because QRC is our second-largest short-line partner, serving important customers at origin and directly feeding our mainline network,” said CN President and Chief Executive Officer E. Hunter Harrison in a prepared statement. “With CN's industry-leading operating model and track record of seamlessly integrating acquisitions, we expect to realize meaningful operating efficiencies from the addition of these properties to our network."

CN plans to invest capital in the lines during the next three years to upgrade infrastructure. The Class I also will replace the railroads’ existing locomotive fleet with more modern motive power.

The transaction does not include QRC's Sydney Coal Railway Inc. in Sydney, Nova Scotia, and Chemin de fer de Charlevoix Inc., which operates between Quebec City and Clermont, Quebec.