Rail Merger Clears Final Hurdle Bn, Santa Fe Deal To Create Nation’s Largest Rail Network

Burlington Northern Inc. and Santa Fe Pacific Corp. won federal approval Thursday to merge into the nation’s largest rail network, stretching from the Midwest to the Pacific, and Mexico to Canada.

The companies and analysts foresee benefits for carmakers, farmers and other shippers, although some critics worry about harm to competition.

Burlington Northern is one of two major railways in the Pacific Northwest, sharing the longhaul market with Union Pacific Railroad. BN’s Spokane division employs about 700 people and operates 500 miles of track, moving lumber products, cement, grain and other goods through the area.

The 4-0 vote by the Interstate Commerce Commission on the $4 billion deal continues the consolidation of the railroad industry. The agency has approved five other mergers among major railways since 1980, including Union Pacific-Chicago & North Western earlier this year.

“There’s a lot of concern, I think, out there about whether there’s going to be additional discussion of future mergers,” said the ICC’s chairman, Linda J. Morgan. “Interestingly enough, you may see more combinations among smaller railroads.”

But Congress is moving to kill the 108-year-old agency, possibly by year’s end, and the Justice Department could get authority over mergers.

The ICC will put the decision in writing by Aug. 23, and the companies could complete the merger by the end of September, said Rob Krebs, Santa Fe’s chairman.

The new rail network would stretch from Canada to Mexico, with 33,000 miles of track in the Midwest, West and Southeast. It would have about $7 billion in annual revenue and dominate rail cargo in the West.

The railroads plan to eliminate 2,750 jobs and save $450 million while speeding the flow of goods across the country.

Network operations probably will be in Fort Worth, Texas, where Burlington Northern has its headquarters, Krebs said. The companies have not decided on their corporate base. Santa Fe’s home is the Chicago suburb of Schaumburg.