CN buys Chicago area rail network

MONTREAL — CN Rail and United States Steel Corp. have signed an agreement under which CN will acquire the major portion of the Elgin, Joliet and Eastern Railway Company (EJ&E) for US$300 million. The acquisition will significantly improve the fluidity of CN’s rail operations in the Chicago region, rewarding customers with faster transit times and more reliable service, the company says.

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.

If approved by regulators, the deal should close in mid-2008.

EJ&E operates over 198 main line miles of track encircling the City of Chicago from Waukegan, Ill., on the north, to Joliet, Ill., on the west, to Gary, Ind., on the southeast, and then to South Chicago.

“Chicago is essential to CN’s rail operations, yet it presents us with major operational challenges,” said CN President and CEO E. Hunter Harrison said. “This transaction will improve rail operations on the CN system and the rest of the Chicago rail network by moving CN trains out of the urban core to EJ&E lines on the outskirts of the Chicago metropolitan area.”

Harrison added that the deal will give CN an opportunity to expand its service to the North American steel industry. Also, streamlined rail operations and reduced congestion will result from the acquisition.

CN plans to invest about US$100 million for integration, new connections, and infrastructure improvements to add capacity on the EJ&E line.