Canadian Nat. Railway Co. to buy Wisconsin Central Trans. for 2.21 times revenue, The

Weekly Corporate Growth Report, Feb 5, 2001

The Deal: The Canadian National Railway Co. has agreed to purchase the Wisconsin Central Transportation Corp. for $800 million. The acquisition is a move by Canadian National to secure its mail link between western Canada and the United States midwest. According to the terms of the deal, Canadian National will also assume $400 million of Wisconsin Central debt. After the news of the transaction was announced, shares of Canadian National rose $2.19 to $35.94, while Wisconsin Central shares jumped up $1.06 to close at $16.

Discussion: The Wisconsin Central Transportation Corp. is a leading short line railroad in the United States, with about 2,850 miles of track in the Great Lakes region. Its United States freight business connects Chicago with Minnesota and Canada and hauls mostly minerals and forest products. In the United Kingdom the company owns 42 percent of English Welsh & Scottish Railway, which controls most of the United Kingdom's rail freight market.

The Canadian National Railway Co. is Canada's No. I railroad, with tracks that stretch from Vancouver, British Columbia, to Halifax, Nova Scotia. The company, which operates a network of more than 15,700 route miles in Canada and the central United States, hauls forestry and automotive products, coal, grain and fertilizers and has connections to overseas shipping. With the 1999 purchase of Illinois Central, Canadian National extended its reach to the Gulf of Mexico.