Proposed Norfolk Southern NS Canadian Pacific CP Acq/Merger

[Gilbert B Norman]

I believe I made this point earlier in this discussion, but to reiterate, all that is left for CP is to go after KCS.

A case could be made that in order to have parity with CN, and the Gulf Coast access they gained with their merger with IC, they should be able to approach KCS.

However, if such were to move forth, KCS Mexican operations would have to be spun off to someone else. Maybe the Mexican government might want them back (they own 50% of KCSM).

[CPF363]

Seems that CP will have to address their ability to get across Chicago in the future. Could NS, CSX or both work a deal on the IHB that could improve CP's Chicago issues without impacting NS or CSX's business as both own 51% of the IHB and CP owns the other 49%? CP also needs to work out an owned route from Chicago to Detroit. Chicago and a line to Detroit is a big hole in their system that is going to require eventual management attention. Was part of the motivation for a CP-NS merger, and for that matter, their prior attempt to complete a deal with CSX, to rectify the Chicago and Detroit problems in the first place?

[Gilbert B Norman]

Mr. CPF has raised good points regarding "parity" with access to Detroit and it's manufactured goods (that's autos) and for which there are no reasonable and practical shipping alternatives. Probably the ultimate solution to Chicago congestion will be this Great Lakes Basin proposal:

http://www.greatlakesbasin.net/" onclick="window.open(this.href);return false;

Presumably if this ever moves forth, all roads will have access (line haul division of rates, joint facility, or a switch, who knows).

Already the NIMBY crowd is "rumbling" and for reasons unknown, UP says "not interested". Of course, there is public funding on the table for the CREATE initiative that will make improvements to the existing infrastructure.

While The Harbor in hindsight should have become a Conrail Shared Asset property with the same agreement as exists in the CRSA regions, it's not. So far as access to Detroit on their own rails (CP presently has trackage o er NS via Toledo and Water Level as well as CRSA access to all industries), I think CP will have to remain at NS's "mercy" not to "lose" their trains and otherwise move them over the road.

[eolesen]

I suspect GLB's proposal is already dead after UP said they'd have nothing to do with it, and I'd be surprised if BNSF is interested.

If CP wants access to Detroit so badly, they could always do it the old-fashioned way -- build it.

They could also petition for trackage rights.


Personally glad to see the merger shot down by the DOJ. I'd be surprised to see any two Class 1's being allowed to merge at this stage of the game. The precedents are there in the airline side of the merger world that DOJ has had enough, and they made some of the same noise in the telecom and satellite TV space.

[justalurker66]

They could also petition for trackage rights.

They have trackage rights on NS ... CP trains run from Detroit to Butler then on to Chicago. And return.

[Gilbert B Norman]

To expand upon Mr. Lurker's report, CP got trackage from the West as part of the Conrail breakup. Initially those rights used the Michigan Central, but with the evolution of that line to predominately passenger operations after its sale to two rail passenger agencies, MDOT and Amtrak, CP trains, as noted by Mr. Lurker.

Of great importance is that CP has Conrail Shared Assets access to all auto related facilities of any consequence. Considering their 49% position in The Harbor, they are in good position to offer one road service through Chicago to Kansas City, where there are an array.of auto assembly facilities. This is by way of the MILW, which to my pleasant surprise based on a few glimpses of it driving out to Stillman Valley, seems to be in better shape than it ever was during "my days".

Only the NS with its Wabash line (route of the Cannonball) that completely avoids Chicago, can beat it. A CSX to either BNSF or UP interchange at Chicago is at a "most definite disadvantage".

[justalurker66]

Only the NS with its Wabash line (route of the Cannonball) that completely avoids Chicago, can beat it. A CSX to either BNSF or UP interchange at Chicago is at a "most definite disadvantage".

In modern terms I believe you are referring to the NS Lake Division Huntington District (Butler to Peru) and Illinois Division west of Peru. If I recall correctly Detroit to Butler is now NS Dearborn Division. The "Wabash" has a lot of single track. Perhaps using the Chicago Line double track is faster, despite passing through Chicago?

[Zeke]

I gather EHH was not appointed CEO of Norfolk Southern at the NS shareholders meeting last week ?

[ACeInTheHole]

No. CP binned the whole acquisition attempt awhile ago.

[rr503]

How is CP's customer service? I've heard quite literally everything about them; from Fred Frailey crooning about precision scheduled railroading to ADM suing them. I've heard they neglect small customers, but at the same time, they made 3,000 cold calls last quarter (year?). So yeah... How is it actually?

[bdawe]

I get CP ads all over my twitter feed, with a train rack running through an industrial facility and a slogan about connecting your business. The brief first version of this ad was a bakery, and then I'm sure someone pointed out to the good folks in Calgary that no one wants their bread bathed in Canadian Pacific diesel exhaust, so they changed it to a paper mill.

[GulfRail]

Good to see Hunter Harrison giving up the ghost. Maybe he can get back to running a railroad now that his takeover attempt has failed.

[MEC407]

"give up the ghost" means "die." Might I suggest a different euphemism?

[GulfRail]

"give up the ghost" means "die." Might I suggest a different euphemism?

I meant "giving up the ghost" in the sense Hunter's proposal to merge CP and NS died on the table. I hope Hunter himself lives a long and productive life after his tenure at CP comes to an end.

[Gilbert B Norman]

Lest there be any question "it's over" , this development , reported today by The New York Times, pretty well closes the book:

http://nytimes.com/2016/08/04/business/ ... cific.html" onclick="window.open(this.href);return false;

Fair Use:

....William A. Ackman, the billionaire investor, is once again shaking up his underperforming hedge fund’s portfolio by selling off a big equity stake in the railway company Canadian Pacific.

Mr. Ackman’s Pershing Square Capital Management on Wednesday sold its entire stake of 9.8 million shares in Canadian Pacific Railway in a series of trades arranged by Bank of America, Credit Suisse and JPMorgan Chase. The shares were valued at about $1.5 billion based on Tuesday’s closing price. Canadian Pacific shares closed on Wednesday at $147.

The article does not address whether Bill made money on the "foray", although with a little research as to when the position was taken and the market price at that time, it could be determined.