(The following article by Brent Jang was posted on the Globe and Mail website on November 18.)
CALGARY — Canadian National Railway Co. believes that bigger could be better, and is open to the idea of a blockbuster merger, says Hunter Harrison, CN’s president and chief executive officer.
Any regulatory worries about reduced competition would need to be weighed against the benefits of North American customers gaining improved service, he said in an interview yesterday.
Burlington Northern Santa Fe Corp. has been touted as a possible merger candidate for CN. Amid U.S. regulatory concerns in 2000, Montreal-based CN and BN of Fort Worth, Tex., abandoned their proposed merger.
Mr. Harrison said that in general terms, without naming any merger candidate, “there’s certainly an argument to be made that there could be quite a bit of efficiency produced, as well as better service.”
On the possibility of a CN-BN combination, he stressed it’s “a long way from anything happening in that regard.”
He added that “I don’t know that BN wants to sell their railroad, I don’t know if we want to buy them and I don’t know what the price would be.”
Mr. Harrison rang the closing bell yesterday on the New York Stock Exchange, celebrating CN’s 10th anniversary since Ottawa sold off its entire stake in the former Crown corporation.
CN’s share price has soared 10 times higher than its value when it began trading a decade ago. CN priced its initial public offering on Nov. 17, 1995, at $27 a share on the Toronto Stock Exchange. Taking stock splits into account, an investor holding 100 shares worth $2,700 back then would now have 300 shares worth $27,417.
“That’s a pretty impressive performance by this group of all-star railroaders,” said Mr. Harrison, who became CN’s CEO nearly three years ago, replacing Paul Tellier. “It’s been a wonderful run.”
Since Mr. Harrison took over CN’s top job, the company’s stock price has more than doubled.
Yesterday, CN shares hit a record intraday high of $92.13, before they finished at $91.39, up $1.77 on the day — a record-high close.
CN executives began a two-day presentation to analysts and investors yesterday afternoon. The session in New York wraps up today with further details on CN’s plans for the next five years.
Mr. Harrison said CN’s “2010 Vision” strategy capitalizes on its extensive North American network and expansion plans such as new container service in mid-2007 that will transport Asian goods arriving at the Port of Prince Rupert in northwestern British Columbia.
“Our prediction basically is that we’re going to do well,” he said, noting that the railway now has a stock market value of $24.8-billion.
CN, which felt the sting of bad publicity after high-profile summer derailments, has had a strong safety record over the years and is keen to put “unfortunate incidents” behind it, Mr. Harrison said.
CN’s slide show yesterday indicated that besides benefiting from Asian trade with North America, the railway also sees opportunities with European trade.