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September 27, 2007 11:00 AM, EDT

CN Buys Midwest Rail Line

Canadian National Railway Co. has agreed to buy most of the Elgin, Joliet & Eastern Railway Co. from U.S. Steel Corp. for $300 million to add capacity and bypass Chicago-area congestion, Bloomberg reported.

CN, Canada’s largest freight railway, plans to invest about $100 million for integration, new connections and infrastructure improvements to add capacity on the EJ&E line, the company said.

U.S. Steel will retain a portion of the freight line supporting its steel works in Gary, Ind., and rename it the Gary Railway, the companies said in a joint statement.

The deal lets the Montreal-based CN avoid tie-ups on Chicago’s rail network by using EJ&E lines on the city’s outskirts, while also giving CN access to EJ&E customers, Bloomberg reported.

The Chicago area has been a source of congestion, Bloomberg reported, citing an industry analyst.