Q: Hi, What are your thoughts on the CN Rail's deal to acquire Iowa Northern Railway ? Is it material? Financial terms were not disclosed. The deal is still subject to US STB review. How does this deal position CN Rail against its competitors ? Does it make CNR stock more appealing to buy? Thank You
5i Research Answer:
Canadian National's (CNR) purchase of Iowa Northern Railway (IANR) gives it access to important industrial and agricultural markets as it eyes reaching 800,000-900,000 in annual carload growth by 2026. The deal also puts CN on better footing to compete with Canadian Pacific Kansas City and sets the first major test for new operations chiefs Patrick Whitehead and Derek Taylor. That being said, without deal disclosure, and the fact that the company is fairly limited in scope, with 275 miles of track connecting to CNR's US rail network, we can only assume it is not hugely material. But we would consider it a good move and makes CNR a bit more appealing overall.