dakotafred 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.
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.
They got back into KC via the exMILW lines, IC&E/DM&E, which CP sold that first became IMRL. In reality, they bought back the railroad they sold. Like IC did with the CC&P. There is some exRI trackage. Nahant(Davenport) to Washington IA that MILW bought. Plus the what was joint RI/MILW south of Polo MO.
I wonder if the reason EHH isn't interested in the KCS is because there isn't some easy assets that could be liquidated for cash fairly fast. To make a CP-KCS merger work might mean to look long term and actually serve customers and move freight. Money can be made, but it might not be fast enough to satisfy some on CP's board.
Jeff
dakotafred 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.
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.
+1
Thank you for the correction, Jeff, on ex-Milw rather than RI. Memory lapse on my part.
kgbw49Mr. 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!
Instead, there's more than enough opportunity in NS's present service territory. That's based on the number of trucks I see on the road in this area (eastern PA, Lehigh Valley to Harrisburg areas). Plus, the "Crescent Corridor" route parallel to I-81.
- Paul North.
Canadian Pacific said on Tuesday that it had revised an offer for its rivalNorfolk Southern in hopes of allaying investor fears about a lengthy regulatory review of the proposed merger.
The revised offer contained a smaller cash component than the previous proposal, which Norfolk Southern rejected last week, and shares in a new holding company that would own both rail carriers. Norfolk Southern shareholders also would own more of the combined company, Canadian Pacific said....
http://www.nytimes.com/2015/12/09/business/dealbook/canadian-pacific-revises-offer-for-norfolk-southern.html
The shine is really off the merger this morning... stocks of both CP and NS are down 4% and 6% respectively. With such a drop in price NS shareholders may be more open to working with CP directly. Maybe that was the plan all along... give NS an offer or two they can easily refuse and then go directly to the shareholders.
Perhaps the bloom is off the rose in Washington regarding the merger of large components of an industry. This is a portion of Fortune Magazine's daily briefing:
"U.S. antitrust enforcers are ending the year with a bang. The FTC yesterday filed a lawsuit to block the Staples and Office Depot merger, while General Electric threw in the towel on its fight with the Justice Department over a $3.3 billion deal to sell its appliance business to Electrolux. Last week, two big Tuna producers - Bumble Bee and Chicken of the Sea - called off their $1.5 billion merger in light of U.S. concerns. And all this in a year when Justice blocked Comcast's $45 billion bid for Time Warner Cable and the FTC blocked a $3.5 billion combination of Sysco and U.S. Foods."
Can someone who has more insight on the market and financials briefly explain what would happen to the stocks of each company if this goes through? I read that NS stock could get to high as $140-$160 a share. What is going on with CP stock during this time and at what point do both stocks become one? I read that after the merger is complete the new company would have a value of $240 a share. How is this number decided? Add both stocks together? Thanks!
The Justice Department currently does not have any jurisdiction over railroad mergers. That doesn't mean the law could't be changes, but right now railroad mergers are 100% an STB decision.
Shipping community not in favor of CP-NS merger
http://www.railwayage.com/index.php/regulatory/rail-shipper-survey-reveals-lack-of-support-for-potential-cp-ns-merger.html?channel=40
Never too old to have a happy childhood!
i agree the Justice Dept. directly does not have jurisdiction over rail mergers. However, consider the Board of the STB. One is a labor lawyer who represented those interests in transportation matters. The second is a longtime Republican staffer in Congress with experience in transportation matters, in particular the mechanics of deregulation. The third is a Democrat from Kansas, where she served in several governmental positions related to transportation.
Given how Washington works, that is probably more expertise in the area being regulated than exists in other administrative bodies. However, if you believe those folks don't have their fingers in the air regarding the direction of the political winds, you are far more trusting of the regulatory state than I.
I agree that approval of mergers is strictly an STB decision. However, I believe the Justice Dept. can intervene in a merger applicaton, and present its arguments why the merger shouldn't be approved, mainly such as the anti-competitive efffects. And even if the Justice Dept. can't or won't intervene, the states and shipper groups can - and often do - present that same objection
Yup. Understand the intervenors. Spent some time in the electric industry.
Paul_D_North_Jr I agree that approval of mergers is strictly an STB decision. However, I believe the Justice Dept. can intervene in a merger applicaton, and present its arguments why the merger shouldn't be approved, mainly such as the anti-competitive efffects. And even if the Justice Dept. can't or won't intervene, the states and shipper groups can - and often do - present that same objection - Paul North.
Try reading some of Fred Frailey's blog posts.
C&NW, CA&E, MILW, CGW and IC fan
Matt Rose at BNSF has spoken on the proposed CP - NS merger.
What will the Union Pacific say?
Victrola1 Matt Rose at BNSF has spoken on the proposed CP - NS merger. What will the Union Pacific say?
Thanks to Chris / CopCarSS for my avatar.
The railroad controlled by Warren Buffett’s Berkshire Hathaway Inc. is open to making a competing bid for Norfolk Southern Corp., the target of a $27 billion takeover effort by Canadian Pacific Railway Ltd.
While BNSF Railway Executive Chairman Matt Rose doesn’t favor more North American rail mergers, he said Thursday that the company won’t sit on the sidelines in any fresh dealmaking and could jump in to pursue Norfolk Southern...
http://www.bloomberg.com/news/articles/2015-12-10/buffett-s-bnsf-open-to-bid-for-norfolk-to-challenge-cp-s-offer
Victrola1the company won’t sit on the sidelines in any fresh dealmaking and could jump in to pursue Norfolk Southern...
Yessss!
She who has no signature! cinscocom-tmw
Mookie Victrola1 the company won’t sit on the sidelines in any fresh dealmaking and could jump in to pursue Norfolk Southern... Yessss!
Victrola1 the company won’t sit on the sidelines in any fresh dealmaking and could jump in to pursue Norfolk Southern...
No - make it the old CBQ colors - black w/white or red pin stripes.
Actually I have thought for some time that a perfect merger would be BNSF and NS. Would give BNSF something in the east.
Burlington, Norfolk & Sante Fe - BNSF.
No repainting required on 7,000 or so locomotives.
So BNSF takeover of NS is good; CP takeover of NS is bad. Why?
I would opine that there is the presumption that CP would gut NS for the short term benefit, whereas BNSF would treat NS as an asset to grow business.
I could be wrong.
Larry Resident Microferroequinologist (at least at my house) Everyone goes home; Safety begins with you My Opinion. Standard Disclaimers Apply. No Expiration Date Come ride the rails with me! There's one thing about humility - the moment you think you've got it, you've lost it...
schlimm So BNSF takeover of NS is good; CP takeover of NS is bad. Why?
I think when you take a serious look at who is truly behind the merger, Bill Ackman, you will find the reason it is not a great idea. Ackman is in the same league as Carl Icahn when it comes to corporate raiding, taking his profit and leaving a shambles behind.
Norm
Okay, here's my thing. Let's suppose, just for the sake of argument here, that BNSF does indeed get involved in all this and it's chief rival, UP, reluctantly decides that it has to join the game as well. NS' chief competitor and rival, CSXT, certainly could not sit idle. So, if the East were to be parceled out between say, BNSF, CPRS and UP, exactly how might the "parceling out" go? Who would get the ex-PRR and ex-NYC Chicago - New York mainlines? What about the former B&O mainline? For that matter, could the former PRR segment from Crestline, OH westward through Ft. Wayne, IN and towards Chicago suddenly figure prominently again? Just trying to throw out all the possibilities here.
FWIW, I know in my heart that CPRS should be going after KCS instead but that's another argument for another day.
tree68 I would opine that there is the presumption that CP would gut NS for the short term benefit, whereas BNSF would treat NS as an asset to grow business. I could be wrong.
I second your thoughts. Pump & Dump is Ackman's modus oporandi. Buy, strip, take cash, leave debt ridden shell.
I think Confusus slogan is coming true. We are living in interesting times.
Would UP & BNSF agree to buy and divy up NS & CSX between themselves as best fits their respective systems?
Victrola1 Would UP & BNSF agree to buy and divy up NS & CSX between themselves as best fits their respective systems?
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