15 October 2007
CP Rail-DM&E Deal Now in STB's Hands
Canadian Pacific Railway has completed its acquisition of the
Dakota, Minnesota & Eastern Railroad, so the plan is now under review by the U.S. Surface Transportation Board.
It could take more than six months for the STB to sign off on the deal, said Kevin Schieffer, chief executive officer of the Sioux
Falls-based DM&E. Wall Street railroad analyst Anthony Hatch said he expects the STB to find no major problems with
the merger, since it would give South Dakota shippers access to another Class I railroad.
Canadian Pacific announced in September it would pay $1.48 billion cash for the DM&E and its subsidiaries. If CP follows through on
the DM&E's long-planned expansion project to carry coal from the Powder River Basin of Wyoming, the deal could cost CP
an additional $1 billion.
DM&E wants to rebuild 600 miles of track across South Dakota and Minnesota and add 260 miles of track around the southern end of
the Black Hills to the Wyoming coal fields.
The rebuilt railroad would haul low-sulfur coal east to power plants, allowing CP to compete with Union Pacific and BNSF
Railway, which combined to carry about 450 million tons of coal from the basin last year. Some of the most vocal opponents of the coal
project have been in Rochester, Minn., because of concerns about its potential impact on the Mayo Clinic.
Dennis Hanson, president of the Rochester City Council, said members of the Rochester Coalition would like to talk to CP officials
about a bypass or another option to using the current track.
"I think we would like to open communication as soon as we can for the simple fact we would like to get started on the right
foot," he said.
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