• IC/KCS merger in the 1990s

  • Discussion relating to the Canadian National, past and present. Also includes discussion of Illinois Central and Grand Trunk Western and other subsidiary roads (including Bessemer & Lake Erie and the Duluth, Missabe & Iron Range Railway). Official site: WWW.CN.CA
Discussion relating to the Canadian National, past and present. Also includes discussion of Illinois Central and Grand Trunk Western and other subsidiary roads (including Bessemer & Lake Erie and the Duluth, Missabe & Iron Range Railway). Official site: WWW.CN.CA

Moderators: Komachi, Ken V

  by Jmusolf
 
Anyone know why this merger was called off? Would've been interesting to see what would've happened if this merger had went through, I wonder if CN would have still gotten involved later on.

http://articles.chicagotribune.com/1994 ... il-network" onclick="window.open(this.href);return false;
  by Leo_Ames
 
It was never really clear why the acquisition fell through, but rumors were that KCS was seeking well over 1 billion and had overvalued themselves so much that no other Class 1 was even interested besides IC. Then after that announcement of their intent, IC's stock price dropped substantially by over $3. Their investors clearly didn't seem particularly enthused at the prospects.

And this was the prelude of the BNSF merger at a time when rumors had Union Pacific considering going after Santa Fe themselves. Some speculated that KCS thought they could position themselves for a better deal with Burlington Northern if that course of events came to pass, and withdrew from the deal in the hopes for an even better situation.

This also was a time when they had just beat IC to MidSouth just before NAFTA, their expansion to Mexico, and other success stories. So some speculate that KCS Industries simply had a change of heart and saw more potential in the long-term in hanging onto this asset rather than selling it off.

I doubt you'll find a precise answer unless someone like Harrison has shed some light on it in an interview in the years since then.