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CP confirms termination of exploratory talks with CSX
"Anyone who knows anything about the wily CEO of Canadian Pacific will tell you that having opened the door to a merger with CSX, Harrison is not going to take no for an answer right off the bat and walk away happy. He will come back. And back and back again, if needs be. Everybody in the business knows this and if they say otherwise, they’re just trying to get you off the scent. " - FF, Oct 16, 2014
If you are an ordinary stockholder of CSX, you much prefer not merger with CP – or any other big railroad. The reason: profits will decline. About 50 years ago a scholar compared several variables with profitability for the Class I carriers (excluding the commuter-haulers and Pocohantas roads), and found that there was an optimal size, then 12 to 15,000 employees. There were economies of scale so that direct costs decreased with size, but management difficulties increased once the sweet spot was exceeded. At that time Pennsy was far and away the biggest, NYC, next, and neither was making much money any more. The profitable companies were like D&RGW, D&H, etc.
Today the optimal size is probably somewhat larger, what with computers to help. But, still, it’s the medium-sized Class I’s, e.g. NS and BNSF, that are consistently most profitable. CSX and UP, the two largest less so. But CP could probably profitably grow some.
I knew this wouldn’t last. CSX is too good for CP.
Guess I should have sold my CSX stock on Friday 
Besides railroads, mergers have almost always (99.95%) resulted in layoffs. Can anyone tell me about BN ATSF, NS, CSX. UP-SP. Did layoffs happen? At Mr Wilson from the Show Me state, Are you sure BNSF is medium and that CSX is bigger?
For Paul Harrison - CSX’s stock closed Friday at 33.86. When trading opened this morning, CSX was down to 32.33, but its price has been climbing back up all day – at 2 PM EST, it was up to 33.265… less than 60 cents a share below where it closed on Friday.
My guess is the market agrees with Fred, who wrote: HH “will come back. And back and back again, if needs be. Everybody in the business knows this and if they say otherwise, they’re just trying to get you off the scent.”
I agree with James D Wilson. I think that a railroad can become so large as to be unmanageable. HH would be well advised to proceed carefully.
There is maybe only one merger I see CP maybe getting away with. If HH is smart he would either give rights to kcs on the former ICE or retain rights on the ICE after selling or merging the former ICE to KCS. Other then that I don’t see any merger of class 1s getting an ok by the US Government. The culture of Safety HH is talking about is laughable at best! Finally anyone who is a President of a Railroad who thinks taking away rather then putting money into the railroad is the way to go is just crazy. HH had a puzzle he could put together at CN. CN/DWP/DMIR/WC/EJE/IC/GT poof! At CP outside of selling off the west end of DME and Selling some of the D and H there really is nothing to put together. HH has a used car and he has sold off about every thing on the car. Now all he has left is sitting on blocks with no motor, glass, or wheels. He sees the dust starting to collect from his ego on the car and is trying to woo anyone he can to think his polished number 2 is really a number 1. Hopefully people are smart enough to see through the dust! The splash everyone is hearing is high-mid management and every smart engineer and conductor jumping off to another railroad or job.
Just more hedge fund guys trying to rape the railroads. A definite NO-GO!