CN (TSX: CNR) announced today that it has submitted a notice of its intention to file a responsive application with the Surface Transportation Board on February 28, 2022. The move is related to the regulatory body’s review of the pending Canadian Pacific (NYSE: CP) and Kansas City Southern (NYSE: KSU) merger.
The company bared that its application will include a request “to condition any approval of a CP-KCS merger on the divestiture” to CN of what it refers to as the Springfield Line.
The Springfield Line is described as the set of railway lines owned by KCS running from Kansas City, Missouri to Springfield and East St. Louis, Illinois. This is a direct alternative to CP’s own line from Kansas City to Chicago, and beyond to Detroit and eastern Canada.
The firm is making the request in line with the agency’s authority to order “the divestiture of parallel tracks” as a merger condition. On the other hand, the CP-KCS merger has previously said it has no plans to invest on the Springfield Line in deference to CP’s existing parallel line.
The Canadian railway firm is set to receive $1.4 billion after KCS backed out of its deal and pursued the merger with CP instead.
In its argument for the divestiture, the company made its case for the Springfield Line, including a US$250 million investment and terminal upgrades.
CN last traded at $154.03 on the TSX.
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