(Reuters circulated the following on September 26.)
TORONTO — Canadian National Railway Company said on Wednesday it planned to buy a major portion of United States Steel Corp’s Elgin, Joliet and Eastern Railway Co for $300 million.
The company said the new lines will significantly improve its rail operations in the Chicago area.
CN said the deal, to be financed with debt and cash-on-hand, should boost diluted earnings per share slightly in the first year after U.S. regulatory approval. It expects the deal to close in mid-2008, provided the U.S. Surface Transportation Board approves the application.
CN plans to invest around $100 million for integration, new connections, and infrastructure improvements to add capacity on the line and allow network synergies.
Under the agreement, U. S. Steel’s Transtar subsidiary will retain railroad assets, equipment, and employees that support the Gary Works site in Northwest Indiana and the steelmaking operations of U. S. Steel. Transtar’s remaining operations will become the Gary Railway.
CN operates approximately 20,300 route miles in eight Canadian provinces and 16 U.S. states.
EJ&E is a Class II railroad that operates over 198 main line miles of track encircling the Chicago.