WASHINGTON (dpa-AFX) - Union Pacific Corp.(UNP) and Canadian National Railway Co. (CNR.TO, CNI) on Wednesday announced a binding memorandum of understanding as a framework for CN to secure competitive access in connection with Union Pacific's proposed acquisition of Norfolk Southern (NSC).
The agreement is subject to approval by the Surface Transportation Board and completion of the merger.
The company said the agreement preserves customer options, resolves terminal railroad ownership issues, expands CN's presence in the Midwest, and maintains gateway protections for customers and railroads.
Under the agreement, CN will gain competitive access to certain shipper facilities where Class I railroad options would be reduced, subject to commercial and operational feasibility.
The agreement also gives CN overhead rights between Tuscola, Illinois, and East St. Louis, Illinois, and customer service rights between St. Louis and Kansas City.
CN will also gain access to Union Pacific's Neff Yard in Kansas City, marking its first operational presence in the city's core.
In addition, CN will acquire Norfolk Southern's ownership interests in the Kansas City Terminal Railway Company and the Terminal Railroad Association of St. Louis.
As part of the agreement, CN will not oppose the proposed Union Pacific-Norfolk Southern merger, and both companies will work together during the Surface Transportation Board review process to implement the agreement.
Union Pacific Corp closed trading 0.19% lesser at $292.56 on the New York Stock Exchange. In the after-hours trading, the stock traded 1.52% higher at $297.
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