Federal agency taking public comments on mega-merger of CN, Kansas City Southern

CN, which operates Kirk Yard in Gary and maintains rail lines across the Region, is seeking federal approval for its $33.6 billion acquisition of Kansas City Southern that would let it ship goods all across North America.

It filed with the Surface Transportation Board for approval of its voting trust to advance the merger that would give it a 27,000-mile train network extending from Canada to Mexico, which is billed as having the potential to boost international trade across North America and could result in increased foreign competition for some of Northwest Indiana’s manufacturing operations.

To address antitrust concerns, CN pledged to divest Kansas City Southern’s 70-mile rail line between New Orleans as it overlaps with its own rail line.

“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,” CN President and CEO JJ Ruest said. “A trust is an essential step so KCS shareholders can receive the full value of their shares while the STB considers our case for a combined, end-to-end rail network and the significant public benefits of connecting the continent. This combination will promote growth and compete with the trucking industry for long-haul movements. It offers more choice for rail customers, port operators, employees, stakeholders and communities.”

The Surface Transportation Board moved forward with the review, requesting more documents. The agency is accepting public comment on the proposed merger through June 28. 

CN is proposing keeping Kansas City Southern intact and independent under its existing management and board of directors, who will be free to pursue independent business objectives. It would have no say over Kansas City Southern’s day-to-day management but would gain more routes that would expand access and shorten transit times to southern markets in the United States and Mexico.

CN and Kansas City Southern said the merger would have many benefits, including more timely service, more competitiveness with barges and semi-trailer trucks and a significant reduction in greenhouse gases. Moving freight by train instead of trucks on the highways is estimated to lower greenhouse gas emissions by an average of 75%.

“Combining KCS with CN is compelling for our customers, employees, shareholders and the local communities in which we operate. We urge the STB to fully consider the benefits of this combination, and to respect KCS’ judgment about its preferred merger partner, so that we can realize the tremendous public interest advantages of the CN-KCS partnership on behalf of our stakeholders, many of whom have expressed overwhelming support,” Kansas City Southern President and CEO Patrick J. Ottensmeyer said.

Montreal-based CN transports more than 300 million tons of products a year, while Kansas City Southern has railroad investments in the United States, Mexico and Canada.

For more information or to submit a comment, visit prod.stb.gov.