Victrola1 Takeover wars seem to have lost their sizzle. What happened to the battles of corporate goliaths? Where have they gone, those swaggering deal makers? "Harriman vs. Hill" is a corporate dust-up that takes us back to the beginning of the 20th century, when tycoons who traveled by private rail merrily raided each other's empires while the world around them cringed..... http://www.wsj.com/articles/SB10001424052702303496804579369203810705602 Is there any chance of Harrison at CP launching a hostile take over attempt?
Takeover wars seem to have lost their sizzle. What happened to the battles of corporate goliaths? Where have they gone, those swaggering deal makers? "Harriman vs. Hill" is a corporate dust-up that takes us back to the beginning of the 20th century, when tycoons who traveled by private rail merrily raided each other's empires while the world around them cringed.....
http://www.wsj.com/articles/SB10001424052702303496804579369203810705602
Is there any chance of Harrison at CP launching a hostile take over attempt?
In the Bloomberg interview, Harrison seemed prepared to go to NSC shareholders directly. Given their dissatisaction with NSC management, it is quite possible he would succeed.
C&NW, CA&E, MILW, CGW and IC fan
CSSHEGEWISCH A hostile takeover might be possible but it would be expensive, think back to the takeover mania of the 1980's. It might also leave the surviving corporation in poor financial shape.
A hostile takeover might be possible but it would be expensive, think back to the takeover mania of the 1980's. It might also leave the surviving corporation in poor financial shape.
I don't think anyone wants to be the "pioneer" in this next round of mergers. Who ever goes first will need to test and overcome the regulatory hurdles and subject their shareholders to protracted uncertainty and unknown cost and conditions that may or may not result in a better combination five or ten years hence. Once the path is cleared, whoever goes next will have a much easier time and may even be encouraged by the regulators in order to maintain competitive equilibrium.
It may be advantagous for all the major systems to get together in order to work out the final system of two or three railroads. They can then present that to the TSB as a group, showing benefits to shippers, shareholders, and the general public.
That's OK, as long as the largest investors can make their money then get out. So the remaining company is weakend, the small investors not doing as well. No one really cares, except the people who's jobs depend (directly or indirectly) on the company and the small investors left holding the bag. They usually don't count.
On another site I read an interesting thought. That EHH may be trying to signal to NS that he might be available to help them out after his CP tenure is up. Pure speculation, but food for thought.
Jeff
NS rejects CP offer.
http://www.usatoday.com/story/money/2015/12/04/norfolk-southern-rejects-canadian-pacific-transcontinental-railroad-deal/76771760/
Never too old to have a happy childhood!
I suspect that EHH's time at CP may be ending shortly. The investment fund hired him to 'cut & slash' CP to profitability. He has done a good job, the there is not a lot more that can be cut at CP. And CP really needs to do a massive signal/signaling upgrate to both the western Canada, and domestic SOO/MILW properties - and there is no capital to do this with.
He was appointed the 'front man' to drive the CP-NS merger, and I suspect that will never happen(at least at the cost he was projecting). He is 71 or 72, he should be looking at retirement...
Jim
Modeling BNSF and Milwaukee Road in SW Wisconsin
CP responded to the NS decision a few minutes ago. It looks as if CP will not give up so easily. They say more clarification will be provided on Tuesday. Hunter has more grit and determination than most CEOs.. I wouldn't count him or CP out just yet.
Ulrich CP responded to the NS decision a few minutes ago. It looks as if CP will not give up so easily. They say more clarification will be provided on Tuesday. Hunter has more grit and determination than most CEOs.. I wouldn't count him or CP out just yet.
What will be the next offer point? How much higher? While Hunter may believe in himself, does the investment community believe in CP ownership of NS?
Canadian Pacific is so weak that all they would do is run the Norfolk Southern to a bone bare money losing operation.
Watch my videos on-line at https://www.youtube.com/user/AndrewNeilFalconer
BaltACD Ulrich CP responded to the NS decision a few minutes ago. It looks as if CP will not give up so easily. They say more clarification will be provided on Tuesday. Hunter has more grit and determination than most CEOs.. I wouldn't count him or CP out just yet. What will be the next offer point? How much higher? While Hunter may believe in himself, does the investment community believe in CP ownership of NS?
I don't know. Personally (looking from the outside in) I thought Jim Squires' response had merit. At least I don't see where the cost savings and efficiencies would come from or how the Chicago bottleneck would be addressed. But maybe Harrison will clarify that on Tuesday. The investment community seems to believe in mergers.. but these people are also for the most part not close enough to the action to make an educated determination as to the real merit of any merger. I guess we shall see..
Other than that, what do you think of the merger, Mr. Squires?
Other than that Mrs. Lincoln, how did you like the play?
dakotafred Other than that, what do you think of the merger, Mr. Squires?
Andrew Falconer Canadian Pacific is so weak that all they would do is run the Norfolk Southern to a bone bare money losing operation.
Hardly.
NSC operating ratio for 3rd quarter 2015 (Oct. 28) = 69.7 percent.
CP operating ratio for 3rd quarter 2015 = 59.9 percent.,
schlimm Andrew Falconer Canadian Pacific is so weak that all they would do is run the Norfolk Southern to a bone bare money losing operation. Hardly. NSC operating ratio for 3rd quarter 2015 (Oct. 28) = 69.7 percent. CP operating ratio for 3rd quarter 2015 = 59.9 percent.,
I don't believe it is as simplistic as that. There are many more factors to consider.
Norm
Norm48327 schlimm Andrew Falconer Canadian Pacific is so weak that all they would do is run the Norfolk Southern to a bone bare money losing operation. Hardly. NSC operating ratio for 3rd quarter 2015 (Oct. 28) = 69.7 percent. CP operating ratio for 3rd quarter 2015 = 59.9 percent., I don't believe it is as simplistic as that. There are many more factors to consider.
Norm: When Mr. Falconer makes such a foolish statement as he did, it is simple to demonstrate the falsehood.
Given the "and that goes for your horse, too" tone of Squires' rejection, I'd be surprised if further overtures from CP were forthcoming.
Maybe now EHH can get after what should have been his objective all along: KCS. He was interested in it once, in his days at the IC. It makes even greater sense for CP, balancing CP with CN down South and putting it into Mexico besides.
One opinion - Given that STB rules require that a future merger must have the effect of increased competition, and the fact that about 2/3 of the US population lives east of the Mississippi, and that it is unlikely that either the Canadian or US governments will ever allow foreign ownership of such a critical segment of economic infrastructure, the only way things change east of the Mississippi is if the two Canucks and two Western roads buy out both NS and CSX and divide them amongst the four of them, resulting in four major railroads competing east of the Mississippi.
There would likely have to be a lot of joint trackage, such as BNSF and CP co-owning the former NS main lines from Chicago to New York, and UP and CN co-owning the former CSX main lines from Chicago to New York, for example.
Right now there is a Class 1 duopoly in the eastern US. Changing the names on the duopoly does not increase competition - it is still a duopoly.
The only way to increase competition in the eastern US is to go from two Class 1 railroads competing in the territory from Boston to Chicago to New Orleans to Jacksonville up to either three or four Class 1 railroads competing in that territory.
Yes, it would be quite a task to figure that out, just like with the Conrail acquisition that resulted in going from a monopoly to a duopoly in the northeast US. But it has actually been done in the recent past.
Again it is just my opinion, but unless BNSF, CN, CP, and UP come walking together up the steps of the STB with a plan to buy and divide the two eastern Class 1 roads amongst the four of them, I don't see anything else getting approval.
(One other note - I seem to remember reading articles back when the merger rules were rewritten that an acquisition of KCS would not be subject to the new rules, so dakotafred's suggestion of CP-KCS might be more feasible from a regulatory standpoint.)
schlimm Norm48327 schlimm Andrew Falconer Canadian Pacific is so weak that all they would do is run the Norfolk Southern to a bone bare money losing operation. Hardly. NSC operating ratio for 3rd quarter 2015 (Oct. 28) = 69.7 percent. CP operating ratio for 3rd quarter 2015 = 59.9 percent., I don't believe it is as simplistic as that. There are many more factors to consider. Norm: When Mr. Falconer makes such a foolish statement as he did, it is simple to demonstrate the falsehood.
Thanks to Chris / CopCarSS for my avatar.
Murphy Siding schlimm Norm48327 schlimm Andrew Falconer Canadian Pacific is so weak that all they would do is run the Norfolk Southern to a bone bare money losing operation. Hardly. NSC operating ratio for 3rd quarter 2015 (Oct. 28) = 69.7 percent. CP operating ratio for 3rd quarter 2015 = 59.9 percent., I don't believe it is as simplistic as that. There are many more factors to consider. Norm: When Mr. Falconer makes such a foolish statement as he did, it is simple to demonstrate the falsehood. I dunno...CP may have a better operating ratio, but could that be more an indication of short term policies of cutting and delaying things in order to make the stock prices look good for short term goals of some stockholders, and less of an indication of longterm strength of a company?
I dunno...CP may have a better operating ratio, but could that be more an indication of short term policies of cutting and delaying things in order to make the stock prices look good for short term goals of some stockholders, and less of an indication of longterm strength of a company?
That is a different question. The poster said CP is so weak they would turn NS into a money-losing operation. Based on EHH's 3 1/2 year record of success at CP (and CN and IC before that), that seems unlikely. Many folks may hate his methods, but it is important to get the facts straight.
Mega-mergers make me nervous, whatever they are or who they involve. They seem to lead eventually to "We're too big to fail!" scenarios.
THEN those involved go running to Uncle Sam begging him to open his wallet and save their sorry butts. It's happened before, it'll happen again.
Well, if you're too big to fail, you're too damn big!
Just my opinion.
Mega-dittos, Mr. Firelock76! Pun intended, but mega-dittos!
The is one thing CP Rail does right.
https://www.youtube.com/watch?v=a_jWaScptQ4
Beautiful Christmas train.
schlimm Murphy Siding schlimm Norm48327 schlimm Andrew Falconer Canadian Pacific is so weak that all they would do is run the Norfolk Southern to a bone bare money losing operation. Hardly. NSC operating ratio for 3rd quarter 2015 (Oct. 28) = 69.7 percent. CP operating ratio for 3rd quarter 2015 = 59.9 percent., I don't believe it is as simplistic as that. There are many more factors to consider. Norm: When Mr. Falconer makes such a foolish statement as he did, it is simple to demonstrate the falsehood. I dunno...CP may have a better operating ratio, but could that be more an indication of short term policies of cutting and delaying things in order to make the stock prices look good for short term goals of some stockholders, and less of an indication of longterm strength of a company? That is a different question. The poster said CP is so weak they would turn NS into a money-losing operation. Based on EHH's 3 1/2 year record of success at CP (and CN and IC before that), that seems unlikely. Many folks may hate his methods, but it is important to get the facts straight.
schlimm[snipped - PDN] . . . shareholder lack of confidence in Squires' probability of cost-cutting in 2016.
- Paul North.
schlimm[snipped - PDN] . . . Based on EHH's 3 1/2 year record of success at CP (and CN and IC before that), that seems unlikely. Many folks may hate his methods, but it is important to get the facts straight.
schlimm In the Bloomberg interview, Harrison seemed prepared to go to NSC shareholders directly. Given their dissatisaction with NSC management, it is quite possible he would succeed.
I'm only one, but I'm not. In an article in the Saturday/ Sunday edition of the Wall Street Journal, NS says that its strategy to offset the declining coal business is to go after intermodal instead. I totally support that - a quote from the article: "Norfolk Southern's commitment to long-term value creation stands in stark contrast to Canadian Pacific's single-minded focus on operating ratio."
Another source in the article said that CP needs NS because CP has few options left to fuel growth other than acquiring another railroad.
And Squires had this to say about EHH's promoting the merger in view of the regulatory issues: "We can't help that [CP CEO] Hunter Harrison seems to have led shareholders down the garden path in terms of regulatory risk here. . . . We view, based on that advice [a number of regulatory experts and lawyers], the hurdles as very substantial."
The article has a lot more on the nerger, but I'm not going to repeat any more here.
Finally, an article elsewhere (Motley Fool, Oct. 8, 2015 - http://www.fool.ca/2015/10/08/why-canadian-national-railway-company-is-a-safer-bet-than-canadian-pacific-railway-limited/# ) points out that:
Seems to me that CP is pretty vulnerable, and may be trying to dodge a bullet with a feeble-minded knee-jerk attempt to acquire NS. Meanwhile, NS has acknowledged its single-commodity market weakness, and has a plan to do the hard work necessary to diversify away from coal.
Paul_D_North_Jr a feeble-minded knee-jerk attempt to acquire NS
Citation? A petty inaccurate and insulting comment about EHH. His record of success speaks for itself. Sounds like someone is having another meltdown.
Mr. North, just for the sake of the exercise and discussion, since NS is looking to boost its intermodal franchise, is there a chance that NS might make a move to acquire KCS to bring single line service from the growth in near-sourcing in Mexico to the approximately 80% of the US population that the combined service territory would cover? I seem to recall that the new STB merger rules had an exemption to the new rules for a KCS merger. Thanks for any insight!
Found this from a 2005 article in Trains regarding the KCS exemption from the new merger rules:
Kansas City Southern: not like the othersThe first flag to fall, if railroad mergers resume, might be Kansas City Southern. Why? When the Surface Transportation Board revised the rules that govern railroad mergers (see page 32), it decided by a 2-1 vote to exempt KCS from those rules. The board concluded that a merger between Kansas City Southern and one of the larger North American railroads “would not necessarily raise the same concerns and risks” as a combination involving the other six Class Is. However, then-Chairwoman Linda Morgan disagreed with her board colleagues. Casting the dissenting vote, she commented, “KCS is of such strategic importance that any merger between it and another Class I railroad could well trigger the next round of major rail mergers resulting in two transcontinental railroad systems.”Will events bear out her prediction? The smallest of the Class Is, Kansas City Southern sits strategically between other major railroads and controls the key bridge across the Rio Grande at Laredo, Texas. With Mexican affiliate TFM, Kansas City Southern operates a 6,000-mile system stretching from Springfield, Ill., to Lazaro Cardenas on Mexico’s Pacific coast. (KCS also has a 42% stake in the Panama Canal Railway.) Potential buyers might have been deterred by the messy dispute over control of TFM and the substantial debt KCS incurred in order to secure the TFM concession in 1996. Now the dispute appears resolved and TFM’s carloadings are growing at a 14% annual pace, which could catch the eye of other railroads looking for a profitable addition to their franchises. The KCS-TFM system would complement any major carrier except Canadian Pacific, with which it has no direct connection. And KCS remains small enough to be easily affordable.However, Kansas City Southern would function quite differently depending on which larger system swallowed it.
I agree about the "strategic importance" seen by Linda Morgan and continue to wonder why nobody has made a move on KCS. CP thought it was so important to get into Kansas City -- via ex-Rock Island ICE -- but stopped there. (Why not KCS to chemical Texas and Mexico?)
UP's already in Mexico, but what would be wrong with a little consolidation and rationalization? ('Enhancement of competition' -- as if there weren't already all those trucks -- is a U.S., not Mexican, preoccupation.)
And Warren Buffet is a big free trader -- why shouldn't he like a Mexican connection for BNSF?
As a modest KCS stockholder whose shares have tripled in value in a few short years, I'm still confident of that BIG payday.
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