BNSF, CN Call Off Merger

Days after a U.S. appeals court upheld a rail merger moratorium imposed by a U.S. regulatory agency, giant North American freight railroads Canadian National and Burlington Northern Santa Fe said they had given up their plan to merge into the largest rail system.

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The proposed merger had been praised by stock analysts for its promise of a relatively smooth, “end-to-end” merging of the largest line in Canada with the second-largest U.S. railroad, avoiding duplication of routes that complicated earlier mergers. The companies have also drawn praise for how they run their systems when many rivals are often plagued with congestion that pushes more freight onto competing truck operations.

However, the heads of other major North American railroads warned a CN-BNSF combination would throw the industry into turmoil as rivals rush to their own mergers. That prospect scared many shippers who have been roiled by shipment disruptions in recent years. So the federal Surface Transportation Board last March imposed a 15-month halt to any new rail merger applications.

With that regulatory authority now upheld in court, CN and BNSF said late Thursday that both their boards had voted to terminate their proposed merger, as it could still take up to 2½ years to win final approval from the STB.