CSX & Canadian Pacific Merger Proposal

 

Good Day,

 

 

With STB ruling and the current Administration's attitude on business .....not going to happen! As stated in the web link "In 2000, the STB ordered a freeze on mergers of large railways following a proposed combination of Canadian National Railway, Canadian Pacific’s bigger rival, and BNSF Railway."

 

 

Regards,

 

Swafford

 

I better buy some CSX stock just in case.

 

Rick

Canadian Pacific and Canadian National need to work on preventing problems such as crew fatigue.

 

http://www.cbc.ca/news/canada/...ew-fatigue-1.2785581

 

 

Andrew

Yes the administration seems anti environment and efficiency.  Yet they preach electric cars and windmills...just what the people don't want.

 

A side note...I enjoy reading editorials on the sale of trucks and SUVs..of course both are leading the sales chart.  You get the view that some of these writers think that the auto manufacturers are forcing people to buy these products at gun point....when in reality they are selling what people want in a free market.

It will be interesting to check the stock prices on these two railroads from time to time!

 

CSX stock price / 10/10/2014 / $29.94 / Market Cap: 29.93B

CP stock price  / 10/10/2014 / $189.37 / Market Cap: 32.66B

 

Regards,

Swafford

 both are down from the highs of a few weeks ago but then again everything is down.

I believe the key phrase here is CP proposed a merger, not CP and CSX.  The WSJ article indicates CSX said no.

If the article is true, it speaks volumes about the arrogance of Hunter Harrison.  His railroad is struggling through ongoing service issues and for anyone at CP to believe now is the time to propose a merger is simply nuts.

I have been a rail shipper for over 35 years and experienced first hand the service melt downs associated with UP/SP, BNSF and the Conrail split.  A merger between CP and CSX would probably make the problems associated with those earlier mergers pale by comparison.  Further, I seriously doubt shipper and industry organizations would offer any support for another merger between large Class 1's.

Curt

Remember this? From the Railway Gazette / April 2000 / STB ban halts BNSF-CN merger

 

http://www.railwaygazette.com/...-bnsf-cn-merger.html

 

CP and CSX merging.....................no way! 

  3.14(10.49%) 11:14AM EDT - Nasdaq Real Time Price $33.08

 

Big jump on CSX stock today......................

Secretly, I think Rich Melvin is going to buy CN out of his petty cash fund and then show the world how a real railroad is suppose to be run! 

 

From what I understand, that's absolutely correct. They would vehemently oppose such a merger. Whether private industry or government regulators, I don't think anyone has any stomach for further limitation of competition, or a repeat of service nightmares that resulted from previous mergers. Such a merger would also leave NS looking for a dance partner, and then there are even further problems. I would have to agree with Swafford: "CP and CSX merging.........no way!"

 

Ha, both railroads hate steam excursions. Hunter Harrison new CP boss from CN said so a while ago. I would rather have NS buy the lines from Sunbury, PA to Albany, NY. More lines for NS to run steam trips on. You won't see a live steam locomotive in downtown Philly, Baltimore, or Washington DC anytime soon.

I read that Hunter Harrison is still pushing the merger. To bail him and CP out ??  Of course, he would want to run the show at CSX's expense.  Let CN and CP merge.

If Canadian Pacific acquires CSX (hope not), then Union Pacific should acquire Norfolk Southern.

Good Day,

 

Yesterday I viewed CP’s balance sheet. CP would need to pay cash and/or add CP stock to the deal. CP does not have the cash to make this kind of merger happen. Hunter Harrison is dreaming!  

 

Regards,

Swafford

I have swapped e-mails with several Wall Street rail analysts since yesterday morning and none of them seem to believe this is a great idea either.

 

Curt

Believe it or not this is a hot topic on 4chan. One of the posters works for CP and has info on how the company is run. Go to transportation.

Those minor things have not prevented bad business decisions in the past!

Interesting reading..... May 16, 2000 / Before the SURFACE TRANSPORTATION BOARD No. 582 / MAJOR RAIL CONSOLIDATION PROCEDURES

 

http://www.ams.usda.gov/AMSv1....cName=STELDEV3020175

 

Regards,

Swafford

Actually, being opposed to a merger like this is pro business move. The reason is very simple, if you allow railroads to merge like this, you end up with a lot less competition, which in turn leads to higher shipping costs and usually, a loss of efficiency and lack of investment in infrastructure. To prove that the merger was a great idea to its stockholders, the company to cut costs will lay off personnel who otherwise were essential, cut spending on maintenance to the bone, to show how great a move it was..which in the long run, often isn't. The idea that mergers make for better business or 'better markets' is generally the opposite, because they lead to oligopoly or monopoly, and that is never good except for those who own the monopoly.

 

As far as SUV sales go, I suspect you are going to see a surge now that the price of oil has dropped almost 30 a barrel in the past several months (it is under 82 a barrel right now), which means you will see gas way less than 3 bucks a gallon...course the same people who buy the Tahoes and Suburbans and Escallades will be seen whining on the news about how much it costs them to fill up their tank when prices go up again.... people have very short memories, and their buying patterns show it. 

There are some past mergers that made sense.  

Yes like the Penn Central!

There are some past mergers that made sense.  

Yes like the Penn Central!

 

 

Try two years later:  The Burlington Northern!!!

 

The BNSF has been a winner too.

 

The N&W, Nickel Plate and Wabash merger was successful as was the later N&W - Southern merger.

 

The SP-Rio Grand merger went well in its brief history.

 

UP did well with the WP, MP and Katy mergers.

 

The UP blew up their railroad for some months by mishandling traffic after their merger with the SP but the SP on it's own would likely not have had the cash to start double tracking the sunset route.  There is a real need now for that extra capacity.

 

And since their merger the BNSF has made major improvements in Abo canyon and on Stampede Pass.

 

The problem with the PC merger was that the P was poison and the C was no antidote.

 

PRR+N&W and C&O+NYC would have been natural.  It only took the nation's largest corporate bankruptcy and 40 years before nature was allowed to assert itself and give us today's CSX and NS.

 

CP+CSX might be Hunter Harrison dreaming out loud.  But CP+CSX+UP and BNSF+CN+NS would be a reasonable end point for North American railroading.  The conditions of approval could fix some of the problem areas that have impaired competition today. In my corner of the country granting UP trackage rights over Stampede Pass and access to the Montana Rail Link at Spokane would improve competition.  Requiring the BNSF to sell the UP the former MILW from Miles City, Montana to the twin cities and sell the UP the segment of the former NP covered by the MRL lease would be better still.  Better access for the UP in the northwest could be evened out by requiring the UP to sell the former WP and Rio Grand to the BNSF to provide better competition from Denver to the San Francisco Bay area.

 

If CP+CSX+UP ever happens what are the odds they will name the new railroad by using the CP's last name and the UP's first name? 

 

No, the CSX won't get any part of the new name.

 

But the KCS will get Mexico. 

 

Viva Kansas Ciudad Sur!

 

 

 

 

 

If CP merged with CSX I would just be concerned that Harrison would abandoned a bunch of lines and close most of the hump yard leaving a shell of a railroad...all for the sake of near term artificial stock gains.  CP's stock price climbed in recent years..but have sales climbed to back that valuation up.  A company is only as good as its revenue (gross and net) and value of assets.

 

 

Did Penn Central abandon anything?  Even the redundant lines that were a stone's throw apart? like into Chicago?

@mike-

Thank You, your thoughts mirror mine. Sometimes mergers make sense, where for example it allows a stronger company to take on routes it doesn't have and beef up the weaker company, or to have trackage rights that would make shipping more efficient and cheaper than using their own tracks. The problem is as many of the pro business crowd love to imaging, is that businesses make decisions based solely on what improves the business or makes them more competitive, and that isn't true. Companies merge with others to eliminate competition (often times it is roundabout, where ostensibly they don't compete with each other, but you find that deeper down the food chain it eliminates competition, that bubbles up as worse prices and choices for customers), and especially in the last 30 or 40 years, to buy another company simply to cut costs by eliminating 'duplicated costs' (usually laying off thousands of workers), or by selling off pieces of the other company, to make quick money that makes stock analysts happy.

 

Given CPs reputation, sounds more like the guy running it cares only about boosting stock price, which time and again has proven to not be such a good thing in more than a few cases...

 

 

Union Pacific did merge the Chicago & North Western into its system of rail lines, but soon they felt like they did not fit in with the Wisconsin and Michigan operations. That led to them selling the former C&NW lines to Wisconsin Central. Then the CN used the Grand Trunk Corp for acquiring the Wisconsin Central.

 

Andrew

CSX and Canadian Pacific merger talks are ongoing:

 

http://www.zacks.com/stock/new...-csx-merger-in-focus

10/20/2014

 

Canadian Pacific Railway (NYSE:CP) confirms that exploratory talks with CSX (NYSE:CSX) have been terminated.
No additional talks between the companies are planned.
The company plans a conference call tomorrow to talk about the topic of M&A.