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(LC, you posted your reply while I was writing mine, so we pretty much say the same thing.) One possible answer is that KCS Industries, which owned the railway, always had a very expensive stock because it also owned several highly successful mutual funds. Those have since been split out. Another possible answer is that UP or KCS was never a strategic move for UP or BN. Consider the pre-MidSouth KCS -- a north-south railroad that went to New Orleans and Beaumont, Texas. What did it get you that you didn't already get by simply interchanging traffic to it? What great traffic source did KCS control, or what new route did would it have created? A third possible answer is that you know you can't merge with everything -- you haven't got the cash, and the ICC or STB won't let you -- so which one do you like the most? That's the one you pick first. It's hard to see how selecting the MoPac was anything but a good choice -- although it wasn't UP's first. It's first choice was the Rock Island. That seems really odd now, but back in the 1960s, given the way the ICC promulgated policy, it was a good choice for UP because it was a weak railroad, and back then the ICC favored strong railroad/weak railroad mergers. A fourth possible answer is that the KCS didn't want a merger partner -- at least, not unless it gave its stockholders a fat premium. Frisco, for one, desperately needed a merger and sought such with BN, while the BN needed the Frisco for its cash flow and credit. The interesting thing that KCS has in its possession now -- that no one else has -- is the MidSouth, which creates a sixth east-west gateway route at Vicksburg (the others are Chicago, Kansas City, St. Louis, Memphis, and New Orleans). It's a growing lane with good connections at each end. Historically, it never amounted to much, and you will look in vain in railroad strategy analyses to find any mention of Vicksburg or the Yazoo & Mississippi Valley as a future transcontinenal route. At least, I've never seen one. That a decade ago what was a dirt-track, tunnel-of-trees railroad has since become a strategic transcontinental is one of the twists of history that makes railroads fascinating. In hindsight, it's obvious that this could happen, but I don't recall anyone pronouncing clarivoyance on the matter 10 or 20 years ago.
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