Union Pacific and CN on July 22 signed two agreements tied to Union Pacific’s proposed merger with Norfolk Southern, under which CN agreed not to oppose the deal in exchange for expanded access to shipper facilities and new operating rights in the Midwest and Mexico.
CN and Union Pacific said they have signed a binding Memorandum of Understanding establishing a framework for CN to secure access in connection with the proposed merger. The settlement agreement preserves customer options and resolves terminal railroad ownership while expanding CN’s presence in the Midwest and reaffirming gateway protections for customers and railroads.
Under the agreement, CN gains access to shipper facilities where Class I railroad options would be reduced from 2-to-1 or 3-to-2, where commercially and operationally feasible, and gains new access in the Midwest through overhead rights between Tuscola, Ill., and East St. Louis, Ill., as well as right to serve customers between St. Louis, Mo., and Kansas City, Mo.. In exchange, CN will not oppose the proposed merger between Union Pacific and Norfolk Southern.
“From day one, we’ve said our merger with Norfolk Southern will preserve and enhance competitive options and create a stronger railroad industry that delivers better service for customers,” Union Pacific CEO Jim Vena said. “This settlement agreement reinforces those commitments by giving expanded access and operating rights to a tough competitor.”
The agreement must still be approved by the Surface Transportation Board.
The railroads also signed a binding Memorandum of Understanding that they said would improve their ability to serve customers.
The second agreement provides Union Pacific with expanded operating rights over CN’s Elgin, Joliet & Eastern Railway corridor through Chicago. The agreement also grants CN new rights over Union Pacific’s network between Memphis, Tenn., and Eagle Pass, Texas, to support freight movements between Canada and Mexico.
“We are thrilled to have an agreement with Union Pacific to expand CN’s access to Mexico. This is a natural extension of our north-south franchise and will open new routes for customers, provide greater choice and strengthen connections between Canada and Mexico,” Tracy Robinson, president and CEO of CN, said. “By extending our reach, we are creating new opportunities for growth while continuing to deliver the safe, reliable service our customers expect. This is another example of CN’s commitment to strengthening rail competitiveness across North America.”