Breaking News | CN Wins Midwest Access in Exchange for Backing UP-Norfolk Southern Merger

CN and Union Pacific signed a binding memorandum of understanding that would grant CN expanded access to Midwest markets if the Surface Transportation Board approves UP's proposed $85 billion acquisition of Norfolk Southern. Under the agreement, CN would acquire Norfolk Southern's ownership stakes in the Kansas City Terminal Railway Company and the Terminal Railroad Association of St. Louis, giving CN its first footprint in Kansas City through usage of UP's Neff Yard. CN also gains overhead rights between Tuscola and East St. Louis, Illinois, plus rights to serve customers between St. Louis and Kansas City, Missouri. CN would additionally secure access to shipper facilities where Class I railroad options would be reduced from 2-to-1 or 3-to-2, where operationally feasible. In exchange, CN agreed not to oppose the UP-Norfolk Southern merger and will collaborate through the STB review process. This represents a reversal from CN's May filing, in which it argued the merger application was incomplete and failed to address competitive impacts. The deal requires STB approval and only takes effect if the UP-Norfolk Southern merger is approved.

• July 27: UP and Norfolk Southern deadline to submit supplemental information ordered by the STB

• STB final decision on the $85 billion UP-Norfolk Southern merger, which remains in abeyance pending additional information

• Potential similar access agreements from other Class I carriers seeking concessions in exchange for merger support

• Impact on CN's competitive positioning in Kansas City versus CPKC's existing presence