Would UP & BNSF agree to buy and divy up NS & CSX between themselves as best fits their respective systems?
In my mind - UP would not want any part of a merger. BNSF could take NS only as their part of the eastern territory that I think they should have to make a more well-rounded railroad. I have nothing to back this up, but have just thought that would be a good business move.
Just one opinion - If this ends up being the last round of Class 1 mergers in North America, the end result will be CSX and NS being divided up between BNSF, CN, CP and UP. Canada will ensure that as a country it owns two railroads. The United States will be the same - it does not let all airlines be considered foreign, for example. Freight railroads are an important piece of economic infrastructure and will stay under the “control” of the US. As a result, we will end up with all four - BNSF, CN, CP and UP - operating in the states east of the Mississippi River, thereby fulfilling the current merger rule requirement that a merger must enhance competition. This will be a larger scale version of the Conrail sale and division between CSX and NS, where a monopoly in the US Northeast became a duopoly competitive situation. If this round of mergers occurs, the eastern US will go from a duopoly to a 4-competitor oligopoly for rail freight transportation. Again, just one opinion.
I really have trouble seeing four railroads (BNSF, UP, CN and CP) dividing NS and CSX (not to mention KCS) in a way that satisfies all. If they succeeded, I’m afraid a perfect hash would be made of some nice stretches of railroad, as happened with the poor old Water Level Route, which was divided between only two.
One theoretical scenario - just an opinion:
If it does happen, there will be lots of shared track similar to the Joint Line in Colorado, Cajon Pass and Tehachapi Pass in California, etc., as a few examples. The Conrail Shared Assets areas in Detroit and New Jersey will be owned by four instead of two. There are four routes east of Chicago at least through Ohio - ex-NYC, ex-Pennsy, ex-B&O, ex-Nickel Plate - and then east of Ohio there would have to be shared trackage.
Four railroads operating north of the Ohio River actually might end up being more logical, with CP getting routes to a Gulf Coast port, perhaps via KCS being rolled into the mix, and both CN and CP getting or sharing a route south from Ohio to Atlanta.
BNSF and UP have much more financial firepower at their call, so it is likely that they would be the purchasers of CSX and NS and then CP and CN would end up being intervenors and would be allowed to buy via STB directives portions of the two eastern railroads as part of the final settlement.
BNSF and UP would be the “go everywhere” entities east of the Mississippi, whilst CP and CN would end up with a general “loop” from Chicago south of the Great Lakes to the Northeast and back up to Montreal, lines to at least one or perhaps two Gulf Coast Ports such as Port Arthur or Beaumont TX, New Orleans LA (CN already goes there), or Mobile AL, and a line from Ohio to Atlanta. That would effectively give CP and CN a “tree” shaped network, with their lines from Vancouver to Alberta as the “trunk” of tree, then lines north of the Great Lakes, south around the Great Lakes, down to Atlanta, and down to the Gulf Coast as the main stems branching off the trunk. BNSF and UP would continue to have more of an east-west orientation, but stretching coast-to-coast instead of ending at the Mississippi River.
It would be possible to have four viable North American railroad systems operating in that configuraton - UP and BNSF would each be
Here’s a timeline of the events leading up to CP Rail annual meeting on Thursday in Calgary.
Sept. 23, 2011 — Pershing Square Capital Management begins acquiring a stake in Canadian Pacific Railway, spending $1.4 billion, the largest single initial commitment to any investment for the U.S. hedge fund…
http://www.thestar.com/business/2012/05/17/timeline_of_cp_rails_proxy_battle.html
Will we see this again for NS?
Yes. But this reminds me of the ending fight scene from the latest Jurrasic World movie where the two T-Rex variants are battling it out on the edge of the lake and then the giant carnivorous whale rises up and chomps the “aggressor” T-rex and it is game over - swallowed by the gargantuan whale.
EHH says it’s time to talk turkey.
http://www.bloomberg.com/news/videos/2015-12-14/cp-ceo-harrison-it-s-time-to-talk-turkey
Like “Gobble Gobble Gobble”? Maybe they are trying to bite off more than they can chew.
I think CP & Harrison are trying to attack NS since Squires just recently was put in the top job and ‘may’ be percieved as a weak adversary in playing the game of M&A.
I looked at both the BNSF and CSX system maps. I would be a perfect fit between the two railroads. With gatewys at Chicago, Springfield, St Louis and Memphis, the one railroad to have trackage from New England to Florida in the east to to all three west coast states.
Can we wonder if Buffet is buying either or both CSX and NS stock to start a proxy fight ? Is it still 4.9% before disclosure ?
The Feds would not allow that…maybe if the American Libertarian Party wins next November…Just kiddin’, there’s more of a chance that Berkshire Hathaway will convert all of BNSF’s trackage to Hyperloop…
Are you ready? Here comes OPEN ACCESS!!!(Sorry, as near as I can tell I am possessed by the Ghost of Futuremodal right now)…
Given how many posters on here are of a rightist persuasion, I wonder how Warren Buffett’s endorsement of Hillary today makes them feel about a BNSF takeover of NS?
Excerpt from Business News Network, Dec. 16
The Calgary-based railway on Wednesday morning held a conference call and offered shareholders in Virginia-based Norfolk Southern up to $25 more per share via a contingent value right, a publicly traded security that is similar to an option. CP says the move adds about $3.4-billion to the purchase price, and investors can sell the security upon the regulator’s decision on the deal in October, 2017.
“Think about this as an insurance policy you can sell,” said Bill Ackman, a CP board member and head of the company’s largest investor, Pershing Square Capital.
Norfolk Southern has already rejected two previous offers from CP, including one made last week.
"I hate to tell you, this is the way I grew up, as a street fighter, but if this is going to be a street fight then so be it,” CP Rail chief Hunter Harrison said on the call.
Anyone that knows the slightest thing about him already knew this would be the case. He only votes Democrat.
While Warren is the definition of a liberal and about as extreme as one could find while I’m very conservative (A fact that I’m sure you’ve guessed by now), I personally have no qualms with BNSF despite my personal opinion of the leader of the group that owns the railroad.
BNSF is a well ran company and while I don’t like the man in the slightest, this relationship with his financial empire provides them with capital and security that allows them to concentrate on long-term goals instead of short-term bolstering of their balance sheet to give the illusion of being more profitable than it really is.
If more mergers have to happen despite the hurdles and lack of clarity over any real benefits, I’d have no concern about BNSF getting involved in the bidding.
I’d be disappointed if they didn’t even try.
No effect. I do always wonder when a good businessman like Buffet, seemingly ignoring his own life experience, comes down on the Democratic side; but then I reflect that expertise in one area does not guarantee expertise or even competence in another, such as politics.
Of course, great success, such as Buffet’s, tends to make us feel wise across the board – which, manifestly, we are not – and eager to share.
What evidence do you have to suggest that Buffett is ignoring his (apparently successful) life experience or in the realm of political understanding he has any less expertise or is any less competent than others, such as yourself or I?
IIRC the STB or Justice required him to divest all other RR stocks.