Canadian Pacific Norfolk Southern Merger

[kgbw49]

With fossil fuels dead per EHH all the coal branch lines are gone when CP takes over. That will be his first $500 million in excess assets sales.

Ironically, there are still hundreds and hundreds of coal plants being planned across Asia from India to China as they try to lift their people out of poverty. So export coal will eventually come back. But with the US Government's war on coal being waged in the US and regulating coal mining and usage out of existence in the US, it may be a moot point.

[Miningman]

Your Presidential election will be crucial to the future of coal. If the Democrats win then coal will continue on its path to extinction. If the Republicans win, especially Mr. Trump, then there will be a resurgence, even serious support for coal domestically. Regardless EHH would likely spin off all those branch lines and be done with it.  This merger won't happen anyway but a merger movement could be awakened and the landscape changed substantially soon. Inland ports, intermodal, big super container ships, enlargened Panama Canal, perhaps a distribution centre for these ships set up away from the US ( i.e. Kingston,Jamaica) all factors. Buckle your seat belts. 

[schlimm]

Miningman

Your Presidential election will be crucial to the future of coal. If the Democrats win then coal will continue on its path to extinction. If the Republicans win, especially Mr. Trump,

I will simply post the "Play nice" rule set down by moderator Brian, which seems to apply:

"We also will no longer tolerate discussions of socialism vs. capitalism, political parties, or elections. They seem to be the root of most of these problems. If this means that some rail topics are off-limits, so be it."

[oltmannd]

kgbw49

With fossil fuels dead per EHH all the coal branch lines are gone when CP takes over. That will be his first $500 million in excess assets sales.

I think rumors of coal's death are a bit exagerated.  It's not really dead, just "dead man walking".  The RRs can play out coal's demise by using up the assets they own supporting it.

That means keeping just enought hoppers patched up and in service.

It means trimming the route structure as volumes decline and mines and power plants close.

It means eliminating capital work on branches and lines that are soley in the coal network.  No tie gangs.  No rail gangs.  Just enough time and material to keep it running at all.

You most certainly can make money from an obsolete product on the way out.  

[BaltACD]

Has always amazed me how CEO's that cut thousands of jobs within their companies are called heros by the shareholders and rewarded with outsized bonuses - instead of being characterized as the abject failures that they actually are. 

CEO's that can't develop business to keep their entire workforce busy and economically productive are FAILURES and should be recognized as such.  They are failures to both the work force and the shareholders, shrinking companies do not increase shareholder value.

[Euclid]

I too would not assume that coal is dead.  The policy to kill it was a radical one, and it could just as radically be undone.  Miningman makes a good point.  Unfolding events could well lead to an instant reversal of the war on coal.

[Norm48327]

schlimm

I will simply post the "Play nice" rule set down by moderator Brian, which seems to apply: "We also will no longer tolerate discussions of socialism vs. capitalism, political parties, or elections. They seem to be the root of most of these problems. If this means that some rail topics are off-limits, so be it."

Schlimm,

Have you read Fred Frailey's most recent blog? Appears to be a double standard here. Fred get political? Hmmmmmmmmm.

[tree68]

BaltACD

...shrinking companies do not increase shareholder value.

But they might increase my dividend, and maybe make my stock go up a bit so I can sell it at a profit...

[wanswheel]

schlimm

 

 "Play nice"

 

Plain ice

https://www.youtube.com/watch?v=RGpRikbGcOk&t=6m47s

[schlimm]

Norm48327

 

 

schlimm

I will simply post the "Play nice" rule set down by moderator Brian, which seems to apply: "We also will no longer tolerate discussions of socialism vs. capitalism, political parties, or elections. They seem to be the root of most of these problems. If this means that some rail topics are off-limits, so be it."

 

 

Schlimm,

Have you read Fred Frailey's most recent blog? Appears to be a double standard here. Fred get political? Hmmmmmmmmm.

 

 

Frailey has his own blog as an employee of Kalmbach.  This is a Kalmbach forum with clear rules for posters.  Not a double-standard at all.  You may not like the rules but they are there for a good reason, IMO.

[BaltACD]

schlimm

Frailey has his own blog as an employee of Kalmbach.  This is a Kalmbach forum with clear rules for posters.  Not a double-standard at all.  You may not like the rules but they are there for a good reason, IMO.

Double standard indeed - let the employees rouse up the rabble and then prevent the rabble from responding under the shield of TOS.  Analogus to presidential stump tactics.

[schlimm]

BaltACD

 

 

schlimm

Frailey has his own blog as an employee of Kalmbach.  This is a Kalmbach forum with clear rules for posters.  Not a double-standard at all.  You may not like the rules but they are there for a good reason, IMO.

 

 

Double standard indeed - let the employees rouse up the rabble and then prevent the rabble from responding under the shield of TOS.  Analogus to presidential stump tactics.

 

Apples and oranges.  The "rabble" as you so condesendingly refer to Frailey's readers, are perfectly free to respond as they wish on Frailey's blog, as many do, including some folks on the forums.  Did you not know that?   And how is your contention analogous to anything?

[Euclid]

In recent times, there was an elaboration of rules for this forum pinned to the top and posted by Angela.  It then was continued with an addendum to the rules posted by Steve Sweeney.  It is not there now, but can someone find it and post it here?  As I recall, the post by Steve was somewhat of a more relaxed position than just the simple “no politics” rule in the rules list.  It was something to the effect of observing that politics are a natural part of some trains discussion, and as such, it would be allowed.

That is entirely at odds with the current “play nice” post which says that certain railroad discussion must be banned if it happens to naturally include something political.  So which way is it? 

[zugmann]

Euclid

That is entirely at odds with the current “play nice” post which says that certain railroad discussion must be banned if it happens to naturally include something political. So which way is it?

I would say that the most recent bulletin takes precedence.

[Murphy Siding]

zugmann

 

 

Euclid

That is entirely at odds with the current “play nice” post which says that certain railroad discussion must be banned if it happens to naturally include something political. So which way is it?

 

 

I would say that the most recent bulletin takes precedence.

 

 Just like how the most recnt bulletin takes prededence on a railroad?  Holy cow!  I'm talking about railroads on a railroad forum.  Look ma!  No hands! 

[Euclid]

zugmann

 

Euclid

That is entirely at odds with the current “play nice” post which says that certain railroad discussion must be banned if it happens to naturally include something political. So which way is it?

 

 

I would say that the most recent bulletin takes precedence.

 

I would say that it is a lap order. 

[kgbw49]

Back to CP-NS, EHH's statement at the JP Morgan Conference Last week:

"People need to get their heads around the idea that fossil fuels are “probably dead,” the CEO of Canadian Pacific Railway said Wednesday.

It is another very effective strategy to try to influence shareholders to vote for CP-EHH to save the company from impending doom. The underlying unspoken connotation seems to be "NS - you guys are toast because you have depended on coal and that is a dead horse. You need me to come in and run this place because you only know how to do coal and that's not going to be there anymore and you can't save the sinking ship, but I can."

The fact of the matter is the US Government is working hard to make coal extinct. Impossible-to-achieve emissions regulations shutting down hundreds and hundreds of power plants, and also making it economically unfeasible to build a new coal plant, plus a recent "moratorium" announced on any future coal leases on Federal Lands in Western States are examples of the policy of the US Government to regulate coal mining out of existence over the next several decades.

Of course, one can make the economic argument regarding natural gas fracking impacting coal, but while that would and has resulted in less coal use, by itself it would not put the coal industry out of business.

And natural gas fracking is not a "safe" technology from existential regulations, either - it, too, is in the gunsights of the EPA but most of the regulatory fire  right now is being trained on the coal industry at this time, with devastating results to many states and tens of thousands of families

So EHH is very astute in trying to use that policy to his advantage in the CP-NS skirmish for control.

Maybe, as mentioned by others, he will bleed the assets as coal mining in the US is regulated to extinction, or maybe he will sell the branchline assets and coal export terminal to a shortline, single track the NW and redeploy the rail elsewhere, grab his gain on the coal assets, and focus on other areas to bring that Operating Ratio down.

But it is quite the play for approval of his resolution by NS sharesholders, and it just might succeed.

 

[zugmann]

Euclid

I would say that it is a lap order.

This forum is self-lapping.

[Euclid]

zugmann

 

Euclid

I would say that it is a lap order.

 

 

This forum is self-lapping.

 

Sometimes I think I can detect that the forum is sloshing. 

[Euclid]

kgbw49

Back to CP-NS, EHH's statement at the JP Morgan Conference Last week:

"People need to get their heads around the idea that fossil fuels are “probably dead,” the CEO of Canadian Pacific Railway said Wednesday.

Maybe the war on coal will end if the people wake up and get their heads around what it will cost them.  With this stagnant economy, people will not be in the mood for $400 electric bills. 

[wanswheel]

Speaking of probably dead, Cheer up

 

[BaltACD]

Ackman's pride

http://www.usatoday.com/story/money/2016/03/15/billionaire-just-lost-1b-troubled-company/81809048/

[BaltACD]

Now the Senate want to talk to Ackman about his drug company's pricing....

http://www.usatoday.com/story/money/2016/03/24/bill-ackman-gets-senate-inquiry-drug-pricing/82231558/

What kind of pricing would he try with NS in the CP fold?

[wanswheel]

Bill Ackman named his companies for Pershing Square, which is the intersection of Park Ave. & 42nd St. in New York. There’s a photo of the viaduct in the annual report.

http://assets.pershingsquareholdings.com/2014/10/PSH-Annual-Report-12.31.15-Print-Ready-Version.pdf

[Victrola1]

ADM probably will not be signing on in support of CP merging with NS. ADM suing CP for poor service while the talk of merging CP and NS is in the wind, what interesting timing on filing.

[Entropy]

If there was any hope of a CP NS merger, its was killed this week.

The government killed Pfizer's merger for tax shelter (inversion), but also a merger between Haliburton and Baker Hughes. 

So a merger that legally would have the headquarters in Canada, its off the table.... Out of the park. 

http://www.cnbc.com/2016/04/05/pfizer-allergan-will-mutually-terminate-merger-over-inversion-rule-changes-sources-say.html

[dakotafred]

I'm just happy for anything that derails this thing. I think it's the wrong combination at the wrong time. Who (at least in the U.S.) needs a combine that links the eastern U.S. and lightly populated western Canada?

I can see it serving Bill Ackman's money interests and Hunter Harrison's (commendable) railroad ambitions, but certainly not the greater U.S. good.

I'm willing to be persuaded about the virtues of mergers involving the U.S. Big Four, and KCS (if CP won't make a play for it), but hardly on a deal that sends the profits from the overwhelming advantage of NS territory to CP's up to Canada.

I like Canada better than I do China, Japan and Mexico, but we "outsource" enough money as it is.

For real efficiency, how about a CP-CN merger?   

[Falcon48]

Entropy

If there was any hope of a CP NS merger, its was killed this week.

The government killed Pfizer's merger for tax shelter (inversion), but also a merger between Haliburton and Baker Hughes. 

So a merger that legally would have the headquarters in Canada, its off the table.... Out of the park. 

http://www.cnbc.com/2016/04/05/pfizer-allergan-will-mutually-terminate-merger-over-inversion-rule-changes-sources-say.html

 

My knowledge of "inversions" and the recent changes in tax rules is somewhat limited (a considerable understatement). But my understanding is that the rule changes don't in any way prohibit or penalize an international merger that moves a U.S. company's domicile to a foreign country.  Rather, the rules simply remove U.S. tax benefits for such a transaction.  If I'm right about this (see the caveat in the first sentence of this post), the new rules would take the CP-NS merger "off the table" only if the merger is being driven primarily by the U.S. tax benefits the merged company would achieve by being domiciled in Canada.  Based on the public statements that I've seen from CP, this isn't what's driving the proposed merger.    

[Falcon48]

The Department of Justice made a filing with STB opposing CP's voting trust petition (see link below).  STB isn't required to agree with DOJ, but the odds are high that they will.  If so, RIP CP-NS.    

http://www.stb.dot.gov/FILINGS/all.nsf/d6ef3e0bc7fe3c6085256fe1004f61cb/10f7e8ef174e7ba785257f8f0054200e/$FILE/240430.pdf

[Falcon48]

Duplicate post deleted.