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CPR’s U.S. Midwest play gets approval

The U.S. Surface Transportation Board has granted Canadian Pacific Railway (CPR) regulatory approval to buy control of the Dakota, Minnesota and Eastern Railroad Corp.

Calgary-based CPR, which announced the ruling in a release Tuesday, noted that the board “denied all requests for
conditions other than those agreed to voluntarily by (CPR)” and that the board’s final decision takes effect Oct. 30.

CPR’s US$1.48 billion cash deal also includes two DME subsidiaries: Iowa, Chicago and Eastern Railroad, and Cedar American Rail Holdings.

CPR CEO Fred Green said in the release that the purchase is a “positive development” for customers of CPR, DME and ICE.

CPR customers get “direct single line access to
the Midwest U.S. markets and the Kansas City gateway, which will improve
fluidity to and from the Southwest U.S. and Mexico.”

DME and ICE customers, meanwhile, get access to single-line haul opportunities to new markets and access to CPR’s car fleets.”

The DME is the largest regional railroad in the U.S. and the only Class
II railroad to connect and interchange traffic with all seven Class I railroads, CPR said. The Sioux Falls, S.D. company’s track connects with CPR lines at Winona, Minn., Minneapolis and Chicago.

The DME serves Illinois, Iowa, Minnesota, Missouri, Nebraska, South Dakota, Wisconsin and Wyoming with access to Chicago, Minneapolis/St. Paul, Kansas City and key ports, CPR said. The deal makes the U.S. lines part of CPR’s U.S. rail network.

According to last year’s figures, grain traffic makes up 36 per cent of the U.S. railway’s freight revenue, second only to industrial products (48 per cent). Fertilizer adds another three per cent.

DME’s long-term plan calls for expansion into Wyoming’s Powder River Basin, where it aims to become the third rail carrier in the coal-rich area, considered to be the largest single North American rail market in terms of volume.

CPR’s proposed deal ran up against environmental and safety concerns early this year from various quarters, including the mayor of Rochester, Minn. (south of Minneapolis and west of Winona) and that city’s prestigious Mayo Clinic medical centre.

The mayor, the clinic and others had urged the Surface Transportation Board to require CPR to make major upgrades and investments before the deal could go ahead. The DME line bisects Rochester and runs within “just a few hundred feet” of the Mayo Clinic, it said.

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