Canadian National CNI announced that it has signed and closed an agreement to acquire Iowa Northern Railway or IANR. IANR operates approximately 275 track miles in Iowa, connecting to the U.S. rail network of Canadian National.
The transaction, whose terms have not been disclosed, closed into an independent voting trust pending regulatory review by the U.S. Surface Transportation Board (STB). A decision from STB regarding the transaction is expected in 2024.
IANR provides service to the upper Midwest agricultural and industrial markets and covers goods like biofuels and grain. The transaction offers a meaningful opportunity to support growth of local businesses by creating single-line service to North American destinations.
Expressing delight at the transaction, Tracy Robinson, president and CEO of Canadian National, said, “We are delighted to have reached an agreement with Iowa Northern Railway. We look forward to the opportunities our combined network will provide customers, farmers, and our partners to respond to the needs of their existing and new markets. By enabling all of us to play an even more important role in this critical supply chain and densifying our southern network, we are accelerating sustainable, profitable growth.”
This move to buy IANR is a prudent one as it will expand the former’s network considerably in the event of a successful outcome of the STB review. We note that CNI shares have declined 6.5% in a year against the industry’s 0.9% growth.
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Headwinds like supply-chain woes, network fluidity challenges and weak intermodal scenario are hurting Canadian National's performance.
Zacks Rank & Key Picks
Canadian National currently carries a Zacks Rank #3 (Hold).
Investors interested in the Zacks Transportation sector may consider some better-ranked stocks like Air Canada ACDVF and SkyWest SKYW.
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