CANADIAN National announced on February 10 that it had agreed a US$2·4bn merger with US railroad Illinois Central, in a move to create ’a seamless north-south network from all major markets in Canada through Chicago and Detroit to the Gulf of Mexico.’ CN President & CEO Paul Tellier said the merger is ’a perfect fit of two complementary lines providing a three-coast strategy from the Atlantic to the Pacific to the Gulf of Mexico.’
The move is intended to harness Nafta cross-border trade flows growing at over 10% a year. Acquiring the 4200 km IC network and its 1350 km Chicago Central & Pacific subsidiary will make CN the fifth largest railway in North America, with just over 30000 route-km and 24600 staff. CN will buy all the IC common stock for US$39 per share; on February 13 it began to buy 75% of the shares for cash, placing them in a voting trust pending regulatory approval expected in early 1999. The remaining 25% will then be exchanged for CN shares.
Tellier and CN Chairman David McClean will retain their posts, whilst IC President & CEO E Hunter Harrison will become Chief Operating Officer of the unified railway. IC Chairman Gilbert Lamphere and Director Alexander Lynch will join the CN board, which will be expanded to 15 members. o