|
Burlington, CN pact dies
|
 |
July 20, 2000: 5:44 p.m. ET
Regulatory moratorium scuttles merger between top North American railways
|
NEW YORK (CNNfn) - Burlington Northern Santa Fe Corp. and Canadian National Railway cancelled their proposed $5.1 billion merger Thursday, becoming the first casualties of the 15-month moratorium on rail mergers imposed by federal regulators in March.
The U.S. Court of Appeals upheld the Surface Transportation Board's moratorium earlier this month, forcing both companies to rethink a deal that would have created North America's largest railroad.
"CN and BNSF are both shareholder-driven organizations, and we have concluded it is not in the interests of our shareholders to assume the risks involved in waiting up to two-and-a-half years for a decision on our transaction by the regulator in the United States," said Paul M. Tellier, president and CEO of Canadian National, and Robert D. Krebs, chairman and CEO of Burlington, in a statement.
Morgan Stanley Dean Witter analyst James Valentine said the cancellation came as no surprise to him.
"Senior Burlington management have been saying since March that if the moratorium is (upheld), the deal is in trouble," Valentine said. "(The court decision) last Friday was the big event."
Valentine said neither company is missing much because of the termination of the merger and added Canadian National's upcoming earnings report will show it is doing fine on its own.
Canadian National will report second quarter earnings on July 25. Analysts' expectations compiled by First Call predict earnings of 76 cents per share.
Shares of Burlington (BNI: Research, Estimates) fell 1/4 to 24-3/4 on the New York Stock Exchange, while Canadian National (CNI: Research, Estimates) dropped 1-3/8 to 30-1/16. 
|
|
|
|
|
 |
|
