UP, C&NW to file for joint control - Union Pacific railroads and Chicago & North Western railroads already have close financial and operating relations - Brief Article

Railway Age, Sept, 1992

Sometime early in 1993, expect to see an application filed before the Interstate Commerce Commission to allow the joint control of the Union Pacific system and Chicago & North Western. The parties filed a "notice of intent to file" on Aug. 12, indicating that a formal filing would be made in four or five months.

The notice-of-intent filing came as no surprise. UP and CNW have had a close operating relationship on movement of both coal and intermodal traffic. In the financial restructuring CNW has gone through, UP has become a major player since the 1989 acquisition of CNW by investors led by Blackstone Capital Partners L.P.

UP obtained the fight to name a director to the board of the smaller property, as well as trackage rights into Chicago. In the most recent restructuring, UP wound up with non-voting common stock which could be converted at its request into voting stock that would amount to 24.3% of the total outstanding voting stock.

In its filing, UP said that it wants to convert: "While applicants do not believe that this step, in itself, would give UP control ... at least given the present surrounding circumstances, the precise line between control and the absence of control is unclear and the relevant surrounding circumstances are subject to change."

The notice-of-intent called attention to marketing and operating coordinations and said that these coordinations, short of full integration of the railroads, could strengthen competition and improve efficiency.

And then: "Though UP has no present plan to do so by a particular date (or at all), UP wishes to be free to acquire majority, or even 100%, ownership...if market conditions and business considerations warrant. Applicants will demonstrate that such ownership, and the full integration of the... railroads, would clearly be in the public interest."