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Rail News: M&A
10/20/2003
Rail News: M&A
CN to acquire Great Lakes Transportation's short lines, switching road and ships
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Canadian National Railway Co. continues to mine the acquisition market. On Oct. 20, the Class I announced it reached an agreement to acquire Great Lakes Transportation L.L.C.'s (GLT) assets from The Blackstone Group for $380 million.
CN would acquire the 355-mile Bessemer and Lake Erie Railroad Co., the 212-mile Duluth, Missabe and Iron Range Railway Co. (DM&IR), switching road The Pittsburgh & Conneaut Dock Co. and Great Lakes Fleet Inc., which operates eight Great Lakes ships.
"[The deal] will drive new efficiencies in our network, improve customer service, preserve competition and expand our participation in the steel industry's bulk-materials supply chain," said CN President and Chief Executive Officer E. Hunter Harrison in a prepared statement. "The transaction [also] will give us ownership of a 17-mile segment of DM&IR track in the Duluth, Minn./Superior, Wis., area that is an essential part of CN's Chicago-Western Canada mainline."
CN plans to finance the acquisition — which would increase its annual revenue about $216 million — through debt transactions.
The railroad acquisitions are subject to Surface Transportation Board approval; the U.S. Maritime Administration, Coast Guard, Federal Trade Commission and Department of Justice Antitrust Division will review CN's purchase of Great Lakes Fleet.
If STB considers the transaction a minor one under current merger rules, CN expects to close the transaction by mid-2004.
During the past two years, CN acquired Wisconsin Central Transportation Corp. and strongly considered a bid for regional Ontario Northland Railway Co. Last month, the Class I submitted one of three bids to assume management of BC Rail Ltd.
CN would acquire the 355-mile Bessemer and Lake Erie Railroad Co., the 212-mile Duluth, Missabe and Iron Range Railway Co. (DM&IR), switching road The Pittsburgh & Conneaut Dock Co. and Great Lakes Fleet Inc., which operates eight Great Lakes ships.
"[The deal] will drive new efficiencies in our network, improve customer service, preserve competition and expand our participation in the steel industry's bulk-materials supply chain," said CN President and Chief Executive Officer E. Hunter Harrison in a prepared statement. "The transaction [also] will give us ownership of a 17-mile segment of DM&IR track in the Duluth, Minn./Superior, Wis., area that is an essential part of CN's Chicago-Western Canada mainline."
CN plans to finance the acquisition — which would increase its annual revenue about $216 million — through debt transactions.
The railroad acquisitions are subject to Surface Transportation Board approval; the U.S. Maritime Administration, Coast Guard, Federal Trade Commission and Department of Justice Antitrust Division will review CN's purchase of Great Lakes Fleet.
If STB considers the transaction a minor one under current merger rules, CN expects to close the transaction by mid-2004.
During the past two years, CN acquired Wisconsin Central Transportation Corp. and strongly considered a bid for regional Ontario Northland Railway Co. Last month, the Class I submitted one of three bids to assume management of BC Rail Ltd.
