Largest Rail Merger in North Amercian History

In late December of 1999, Canadian National Railway Co. (CN) and Burlington Northern Santa Fe Corp. (BN) announced the largest rail merger in North American history. The transaction is valued at $28 bn. It is proposed that the two railroads will continue as separate entities until regulatory clearance is obtained by mid-2001. Shareholders from both companies will then swap their stock for shares of a new holding company, North American Railways Inc. CN shareholders will end up with approximately 30% of the shares of the new company. CN and BN will each become one hundred per cent owned subsidiaries of North American. North American’s headquarters will be in Montreal with Paul Tellier, CEO of CN, as President and CEO, and Robert Krebs, CEO of BN, as Chairman. The new company will oversee 80,000 kms. of track, have approximately 67,000 employees, and have an annual revenue of $18.5 bn.

Stikeman Elliott is acting for CN with the Stikeman team being comprised of John Stransman, Ron Nicholls, Margaret Grottenthaler and Andrew Grossman on the corporate side, with assistance from the firm’s Montreal office. Ron Durand, John Lorito and Kim Brooks advising on tax. Lawson Hunter and Paul Collins are providing the competition advice. In the US, Davis, Polk & Wardwell and Harkins Cunningham are representing CN.

Torys is acting for BN with the Torys team being comprised of James C. Baillie, Q.C., Peter D. Ballantyne, Philip Symmonds, John Unger and William A. Charnetski. In the US, Mayer Brown & Platt is representing BN.