Canadian National Railway believes it will win US regulatory approval to buy Elgin, Joliet & Eastern Railway Co, but if it does not it will find another way to "skin the cat" of rail congestion around Chicago, its chief executive said Monday.
Canadian National's plan to buy the Chicago-area railroad for $300m has run into vocal opposition in the city's western suburbs from residents worried that increased train traffic on the EJ&E's tracks will slow down cars at highway grade crossings and cause safety problems.
"I'm cautiously optimistic we will have this transaction completed by year-end," CEO Hunter Harrison told analysts in a conference call on Canadian National's second-quarter financial results.
Harrison said that while CN wants to complete the purchase to make its operations more efficient, it will walk away if the regulatory process drags on too long, or it is required to pay mitigation costs that are too high.
"We're very good at turning our back and walking the other way, and figuring another way to skin the cat," Harrison told reporters.
Canada's biggest railway struck a deal in September to buy the bulk of the 198-mile (315km) EJ&E from United States Steel Corp in an effort to speed up freight traffic through the congested Chicago rail hub where its trains now face lengthy delays.
The EJ&E's tracks run around the outskirts of Chicago and connect with all of CN's major lines running into the city.
Canadian National had initially expected the deal would close by mid-2008, but it has been held up by an environmental impact review by the US Surface Transportation Board, which must approve the transaction.
CN warned in May that its tentative deal with US Steel expires at the end of 2008 and there are no guarantees the steelmaker will renew the agreement.
The railway has also said in documents to the Surface Transportation Board that even if the takeover deal fails, more freight traffic could be routed via the EJ&E through agreements that would not require regulatory approval.
By Allan Dowd, Reuters
