Canadian National Railway, Burlington Northern to merge rail

Journal Record, The (Oklahoma City), Dec 21, 1999

DALLAS (AP) -- Canadian National Railway Co. and Burlington Northern Santa Fe Corp. plan to merge their rail operations in a $6 billion deal that would create the largest railroad in North America.

The aim of the deal announced today is to provide a unified rail transport service throughout Canada and the United States.

The combined company would have about 50,000 miles of track. Rails would extend from Los Angeles to Halifax, Nova Scotia, and from the Gulf of Mexico to Vancouver, British Columbia.

The new company, which would be called North American Railways and be based in Montreal, would outrank Union Pacific Corp. as the biggest line on the continent, according to the new company.

The companies currently employ about 67,000 people and generate more than $12.5 billion in annual revenue.

The railroads expect that any work force reductions would be handled by normal attrition since the companies have minimal overlapping operations and only minor duplication of activities.

The companies don't expect to complete the deal until 2001 because it requires the approval of the shareholders, the courts, and various government agencies on both sides of the border.

The deal consists of a stock swap under which Burlington Northern shareholders will get a share of the new company for each of their shares, while Canadian Northern shareholders will get 1.05 shares of North American Railways stock for each of their shares.

The new company's 15-member board will consist of six members drawn from each of the current CN and Burlington boards.

Burlington Northern CEO and chairman Robert Krebs will be nonexecutive chairman of North American Railways, while CN president and CEO Paul Tellier will be president and chief executive of the new company.

Three outsiders would also be named to the board. They are Laurent Beaudoin, chairman of Bombadier Inc.; Steven Burd, chairman and CEO of Safeway Inc., and Jean C. Monty, president and CEO of BCE Inc.

The Fort Worth-based Burlington is the result of the 1995 merger of Burlington Northern and Santa Fe Pacific. The company has 44,000 employees and had a profit of $822 million on revenue of $6.7 billion for the first nine months of the year.

CN acquired Illinois Central and now has operations that span Canada and mid-America.