Catch em while you can
YESSSSS!!! Finally!!!
Bloomberg article.
Canadian Pacific Said Near $25 Billion Kansas City Southern Deal - Bloomberg
The first post link said STB already approved purchase. Rail eagle ""IMO no way.
And from Financial Times as well. Just didn’t expect this to happen late on a Saturday night though. https://www.ft.com/content/9d4c383a-b3ee-415d-beaf-3cc7a6dc5993
How can STB approve if (as of Friday) there isn’t a finance docket (FD-) yet?
This looks like a April fools that leaked too early…
This purchase does make sense.
KCS operates in Mexico also, and I imagine they will say no.
Will STB consider this a ‘Major’ tranaction?
Big news maybe but likely just wishful thinking until STB grants approval. Government approval with strings attached won’t come quickly…
I’ve wondered how KCS managed to remain a survivor, when all other similar sized Class I’s have been absorbed decades ago.
Given the similarities with KCS and the IC, this seems to have been the perfect move for CP right after the CN/IC merger. Don’t know why it took so long.
Great news and I kind of suspected it earlier as Milwaukee Road had a relationship with KCS in KC that Soo Line and then CP kind of inherited. CP will give KCS the Capital it needs to continue to upgrade it’s line in South Texas as well. Texas will become a trading gateway for North-South trade for U.S. and Canada, more jobs for Texas.
KCS used their heavy debt and then their increased size (KCS de Mexico) as kind of a poison pill takeover defense. CP just gained so much access to capital the debt and size obstacles were no longer an impediment.
I’m gonna surmise that anyone commenting “great news” has never been a rail shipper during a merger. If promises of merger related improvements were currency, shippers would have been millionaires after the last round of Class 1 mergers.
Balt, back in the day when the STB revamped merger rules as a result of the proposed Santa Fe-CN merger, they left KCS in the “old rules” category. The old rules, if I remember correctly, were geared toward merger approval, while the new rules were more stringent.
At the same time, both carrriers are Class I so it will almost assuredly have to be a major transaction.
Now that this is official. CP will be a force to reckon with in Automotive. The Big 3 now have access to single line service from the Midwest to Mexico. This part is what I’m most curious, and excited about with this combination. CP will more than likely make a move on CSX’s Grand Rapids Line between Porter, IN and Detroit. They’ll need their own RoW now between Chicago and Detroit. Expect a future annoucnement on a new Detroit-Windsor Rail Tunnel.
KCS bought out the Mexican share of KCS de Mexico in 2005. So if your referring to the Mexican government blocking the merger. Not sure on what grounds they would do so because the Merged track or track consolidation would be entirely outside of Mexico. And had they wanted to object they would have objected to the 2005 buy out but they did not. The merged system is in the national interest of Mexico as well in regards to lengthening their reach into the U.S. and Canada.
Will NS try to acquire full ownership of the Meridian speedway ?
CP-KCS is basically a end to end merger, so there is not much in the way of duplicate lines to be eliminated as there were in most of the rest of the Class 1 mergers. The elimination of duplicate lines and thus competition at locations those lines served.
Balt:
“End to end” isn’t what it used to be.
Where this will have a negative competitive impact is at Canadian origins with interswitching that ship to KCS destinations in the south central US.
Under the current environment, a Canadian shipper can use either CP or CN to handle the first half to two thirds of a linehaul to say a point in Arkansas, Louisiana, Texas or Mississippi. If CP controls KCS, that option goes away as CP will insist on a maximum linehaul.
Of course, the reverse is true for a US shipper originating on KCS going to Canadian destinations at which they currently can negotiate with both CP and CN and select the better option.
CW