Up Drops Its Opposition To Bn-Santa Fe Merger

Failed suitor Union Pacific railroad is dropping its opposition to the merger of Burlington Northern Inc. and Santa Fe Pacific Corp. in exchange for the right to travel on a Santa Fe line.

The agreement Wednesday grants Union Pacific Corp. rights to Santa Fe’s line between Abilene, Kan., and Superior, Neb., in order to preserve two-railroad competition at Superior.

Union Pacific’s opposition to the proposed merger - which will create the nation’s largest railroad - could have slowed the current review of the marriage by the Interstate Commerce Commission.

Burlington Northern defeated Union Pacific in a bidding war for Santa Fe in January.

“The merged system will provide UP with a stronger challenge, but that’s what competition is all about,” Dick Davidson, chairman and chief executive officer of Union Pacific Railroad, said in a statement.

The deal ensures that grain shippers in Superior will have competitive rail service, Santa Fe spokeswoman Catherine Westphal said. Superior currently is served only by Burlington Northern and Santa Fe, she said.

The merger partners also said Union Pacific would get the right to use Kyle Railroad as its operating agent on the affected line.

In a separate statement, Union Pacific said Superior was one of the few locations in which the Santa FeBurlington Northern merger would reduce competition.

Union Pacific said it also considered offering competing service between Denver and the Texas points of Amarillo, Plainview and Lubbock, but concluded Santa Fe and Burlington Northern were not in a position to legally grant it rights to track on that line.

Burlington Northern and Santa Fe expect to receive ICC approval for their $4 billion merger by Aug. 23.

Shareholders of the two companies approved the deal Feb. 7 after Union Pacific, currently the biggest U.S. rail operator, dropped out of the bidding for Santa Fe.