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Canadian Pacific Norfolk Southern Merger

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Posted by zugmann on Monday, April 11, 2016 6:52 PM

kgbw49

I think right now a certain CEO is sitting in the Executive Suite in Calgary in an easy chair, sipping on a congac, savoring a Cuban Cohiba, and listening to Wilbert Harrison singing "Kansas City".

"Kansas City, Kansas City, here I come..."

 

Guess his legacy will never rise above what is scrawled on the bathroom walls of locomotives. Too bad; so sad.

It's been fun.  But it isn't much fun anymore.   Signing off for now. 


  

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Posted by Ulrich on Monday, April 11, 2016 6:29 PM

Finally, they came to their senses. Just run the damn railroad and forget about building empires of dubious value. NS and CP can work together without a merger.

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Posted by kgbw49 on Monday, April 11, 2016 6:20 PM

I think right now a certain CEO is sitting in the Executive Suite in Calgary in an easy chair, sipping on a congac, savoring a Cuban Cohiba, and listening to Wilbert Harrison singing "Kansas City".

"Kansas City, Kansas City, here I come..."

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Posted by Falcon48 on Monday, April 11, 2016 12:59 PM

Entropy
 
oltmannd

 Stating the obvious department:

https://finance.yahoo.com/news/canadian-pacific-terminates-efforts-buy-113911974.html

This was starting to sound more and more like the Monty Python "Pet Shop" sketch.

 

 

 

EHH saw the writting on the wall, all the money in the world wouldn't let Canadian CPRR buy ownership to an American RR under this administration. 

Its a loose loose for Washington, loss of corporate tax, loss of jobs (tax payers). 

Note my post from last week, that Pfizer deal was the skull and cross bones warning to the M&A market. No matter what happens, big brother is still in charge. 

 

The "skull and crossbones" was the DOJ opposition, which made it a near certainty that CP wouldn't get the voting trust it needed.  It was no surprise that CP pulled the plug after the filing.  The handwriting was on the wall.

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Posted by caldreamer on Monday, April 11, 2016 11:14 AM

WRONG, WRONG and WRONG.  Corportate and employee taxes will be paid to Washointon and the States.  If the merger went through the corporate taxes would have been lost because the corporate headquartes would have been moved to Canada.  This the best that could happen.  It was an attempt by EHH to steal an american company by a back door method and it did not work.

 

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Posted by Buslist on Monday, April 11, 2016 10:12 AM

Victrola1

What affect will CP's failure have on any future North American rail mergers for the forseeable future?

 

 

there won't be any. What will poor Fred write about now. Seems like he and Hunter were the only 2 folks in favor.

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Posted by Victrola1 on Monday, April 11, 2016 9:28 AM

What affect will CP's failure have on any future North American rail mergers for the forseeable future?

 

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Posted by Entropy on Monday, April 11, 2016 8:25 AM

oltmannd

 Stating the obvious department:

https://finance.yahoo.com/news/canadian-pacific-terminates-efforts-buy-113911974.html

This was starting to sound more and more like the Monty Python "Pet Shop" sketch.

 

EHH saw the writting on the wall, all the money in the world wouldn't let Canadian CPRR buy ownership to an American RR under this administration. 

Its a loose loose for Washington, loss of corporate tax, loss of jobs (tax payers). 

Note my post from last week, that Pfizer deal was the skull and cross bones warning to the M&A market. No matter what happens, big brother is still in charge. 

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Posted by oltmannd on Monday, April 11, 2016 6:47 AM

 Stating the obvious department:

https://finance.yahoo.com/news/canadian-pacific-terminates-efforts-buy-113911974.html

This was starting to sound more and more like the Monty Python "Pet Shop" sketch.

-Don (Random stuff, mostly about trains - what else? http://blerfblog.blogspot.com/

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Posted by Falcon48 on Saturday, April 9, 2016 1:49 PM

wanswheel

Technically neither department objects to the merger, rather to the trust arrangement where EHH could run NS as a virtual ‘fait accompli’ CP subsidiary before the merger is approved or not.

 

 

Absolutely correct - DOJ and DOD are objecting to the voting trust, not the merger (since there is no merger presently on the regulatory table).  As such, an adverse STB decision on the voting trust wouldn't itself kill the merger.

But, as I read the tea leaves, the voting trust arrangement CP wants is critical to its business case for the merger.  If it can't do the voting trust, the merger makes no sense.  In fact, if the voting trust is turned down, there's probably little (if any) prospect of the NS stockholders passing the resolution directing the NS board to negotiate with CP.  That's why, in my view, an adverse STB decision on the voting trust will, as a practical matter, kill the merger.  And DOJ's opposition (more so than DOD's) makes it very likely that this is what will happen. 

The other thing that could happen is that STB will refuse to issue a definitive declaratory order one way or another, on the grounds that the issue isn't "ripe" (i.e., there is no actual voting trust or merger on the table).  This is an alternative briefly suggested by DOJ (Fn 5) and several other commentors.  If STB did this, I would expect that the decision would also have some negative comments about the voting trust which would have the same practical effect as an adverse decision on the merits.   

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Posted by kgbw49 on Saturday, April 9, 2016 1:11 PM

I think the strategy that opposers including NS and other railroads are using is to try to stop the merger by having the phony "reverse trust" manuever declared what it is - a de facto end run around the merger rules.

if the phony trust manuever is not allowed, then CP can either drop the bid or try the hostile takeover route. In the latter case, other bidders will materialize because they are not going to let traffic originated on NS that is destined for the Pacific Northwest now go via Kingsgate, or international container traffic originated on NS that would otherwise be shipped via US West Coast ports be diverted to Vancouver and an expanding Roberts Bank.

in that scenario, the lion's share of NS will go to the lion, and the scraps will go to the hyena, CP.

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Posted by wanswheel on Saturday, April 9, 2016 10:56 AM

Technically neither department objects to the merger, rather to the trust arrangement where EHH could run NS as a virtual ‘fait accompli’ CP subsidiary before the merger is approved or not.

 

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Posted by Falcon48 on Saturday, April 9, 2016 10:18 AM

BaltACD

Here's a link to the actual DOD filing:

 

http://www.stb.dot.gov/filings/all.nsf/ba7f93537688b8e5852573210004b318/2e69852c5664f0cb85257f8e0054ea7b/$FILE/240423.pdf

 

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Posted by dakotafred on Saturday, April 9, 2016 7:52 AM

Yes to above. Advantage 90 percent CP and Canada, injury to rest of U.S. roads, especially BNSF and UP, and to our West Coast ports.

If Harrison and Ackman can't see the advantages of KCS and the new territory, plus Mexico, outlined above, it looks like they will have to be satisfied cultivating their own backyard.

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Posted by kgbw49 on Friday, April 8, 2016 10:12 PM

It may not be over 'til it's over, but it is sure starting to look like it's over.

In some respects, when one looks at the CP network, it is understandable why they want to try to expand. Canada's population is about the size of California's population, so the transportation market there that goes with that population is a certain size. And even in Canada, CP does not go everywhere like CN does.

Then in the US, CP's route structure is geographically limited, with much of it in granger territory. So to grow the franchise CP obviously needs to go to more places where there are more people and industry, and that means some form of US expansion.

Maybe a Plan B for CP is to try to stitch together some regionals and some short lines from Genesee & Wyoming. For instance, acquisition of the CF&E, the former DT&I, the Wheeling & Lake Erie, and the B&P would give CP access to every major city north of the Ohio River and west of the Appalachians. Bring the mains up to 40 mph Class 3 track, connect those markets to the Port of Vancouver and the Port of Montreal, and add that traffic to existing traffic on existing lines and they might have a ballgame in terms of a US expansion that might get approved.

There is also an Alabama cluster that if it could somehow be reached via trackage rights from Cincinnati and appended to those other routes would get CP to the Port of Mobile.

But all that might likely take a bit longer than current CP management would prefer, but it would not be that different than what CN did stitching together the DM&IR, Wisconsin Central, and EJ&E to connect the former IC lines to the Ports of Vancouver and Prince Rupert. 

Of course there is always KCS to get to Texas and the Gulf Coast as a Plan C, and that would be under the old "merger-friendly" merger rules. That gets CP to Dallas, Houston, New Orleans and Mobile, not to mention Mexico.

Continued interesting times indeed.

 

 

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Posted by BaltACD on Friday, April 8, 2016 8:31 PM

Never too old to have a happy childhood!

              

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Posted by Falcon48 on Friday, April 8, 2016 12:10 PM

Duplicate post deleted. 

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Posted by Falcon48 on Friday, April 8, 2016 11:47 AM

Duplicate post deleted.

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Posted by Falcon48 on Friday, April 8, 2016 11:43 AM

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

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Posted by Falcon48 on Thursday, April 7, 2016 9:01 PM

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.    

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Posted by dakotafred on Thursday, April 7, 2016 8:35 PM

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?   

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Posted by Entropy on Thursday, April 7, 2016 12:33 PM

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

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Posted by Victrola1 on Friday, March 25, 2016 6:06 PM

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.

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Posted by wanswheel on Thursday, March 24, 2016 10:50 PM

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

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Posted by BaltACD on Thursday, March 24, 2016 7:31 PM

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?

Never too old to have a happy childhood!

              

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Posted by BaltACD on Tuesday, March 15, 2016 8:51 PM

Never too old to have a happy childhood!

              

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Posted by wanswheel on Monday, March 14, 2016 11:49 PM

Speaking of probably dead, Cheer up

 

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Posted by Euclid on Monday, March 14, 2016 9:14 PM

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. 

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Posted by Euclid on Monday, March 14, 2016 9:08 PM

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. 

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Posted by zugmann on Monday, March 14, 2016 8:51 PM

Euclid
I would say that it is a lap order.

This forum is self-lapping.

It's been fun.  But it isn't much fun anymore.   Signing off for now. 


  

The opinions expressed here represent my own and not those of my employer, any other railroad, company, or person.t fun any

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