I just found this and posted a link to the story here;
http://www.tracksideproductions.com/forums/index.php?showtopic=371
Since the story is fairly new, I thought I would alert anyone with an interest to it.
Anyway, what are your thoughts, what does this mean for CPR and how will this help CP position it’s self for the future?
I’m puzzled.
This is not the first time I’ve seen a reference to the DM&E being a connection to KCS at Kansas City. As far as I am aware, the southmost point the DM&E achieves is Manley Iowa (or perhaps Mason City) on trackage rights on the UP.
I think the KCS connection being discussed is the IC&E line that runs down the Mississippi and then southwest from Muscatine. Even assuming DM&E has rights over that line, for any shipment originating or terminating in the Dakotas (or Powder River), it is very much the long way around. Both the UP and the BNSF have routes that are much shorter.
Perhaps I have confused two different advantages to the CP for this combination? The first being the proposed line to Powder River coal and the second a bridge between the KCS at Kansas City and the Chicago railroad complex.
Do you ever get the feeling that everyone in a room knows something that you don’t? [%-)]
DM&E and IC&E are both owned by the same holding company, Cedar American if I am not mistaken.
The IC&E lines are the former I&M Rail Link, CP Rail, Soo Line, Milwaukee Road lines between Chicago, Kansas City and other Midwest places respectively.
So, things are moving. It seems that CP Rail is rethinking its sale of those lines.
greetings,
Marc Immeker
That is really a shame. I wanted it to go to KCS.
Gabe
Better get some pics of DM&E and ICE before they disappear! Sure looks like CNW lines (even old ones!) are still a good commodity to own.
A legal technicality. Actually Cedar American was created by DM&E Corp. for their IC&E aquisition. Therefore, DM&E Corp. owns DM&E Railroad as well as Cedar American, which in turn owns the IC&E. Thus, the sale of DM&E Corp. would include DM&E Railroad and Cedar American/IC&E.
This was a wise move by CP, as this was the last good chance for any real expansion without a merger. No doubt CN’s bidding helped boost the price up a several notches.
Looks like Mayo is going to be left kicking and screaming.
Future forcast: CP & KCS?
Gabe -
KCS doesn’t have the cash or borrowing capacity to take on this deal and also has no direct connection to the DM&E.
LC
Here is the link to the announcement from CP’s site:
http://www8.cpr.ca/cms/English/Investors/Strategy/Growth/default.htm
As a current CPRS employee all I can say is that this is HUGE and EXCITING!!! First off, CP made a monumental mistake when they sold off the “Kansas City Corn Lines” back in 1997. When news broke earlier this summer about Cedar American looking for possible “investors”, I was excited that CP was mentioned as a possibility but even then I thought that eventually it would be rival CN who would wind up with DME/ICE; simply because it would be a good fit for them, too and, let’s be honest here, they’ve been a lot more aggressive than CP in the last 10 years or so in making acquisitions. So you can imagine my utter shock (and happiness) when I learned of this breaking news when I came into work this A.M. But I also believe that CPRS really, REALLY needed to do this because it would have been shut out of ANY real expansion possibilities had it lost out on this. And now, with this move, CPRS has a real opportunity to be a REAL player in the next few years and I personally hope that somewhere not too far down the road that CPRS makes a play for the KCS.
Gabe, I understand your disappointment that it wasn’t KCS who made the move. That would have been a good fit for them as well. But CPRS needed this much more than KCS or even CN needed it.
Lets see here STB plan to build into the PRB check approved by the STB check. Cash and finacing ready CHECK. Seeing the MAYO group PUKE and Spew a LATTE all over their papers if you are an employee of the DM&E today PRICELESS. Somethings even Mastercard can not get you it takes a merger to do.
I’m really hoping that this also means that CP and KCS will now conisder a merger down the road.
I remember reading not to long ago that there were a couple of companies (UP, BNSF, CN) interested in KCS, but it was unlikely that the STB would approve any of these mergers as such a merger would give them too much of a monopoly in the region. A CP/KCS merger would keep the competition more or less where it is today.
Doesn’t surprise me @ all. There is no way DME can go at it alone on the PRW project. TAhey are either going have to have a partnership w/a class 1 or just outright merger. Whoever gets DME, be willing to spend millions on upgrades and see what that does to the bank savings.
CP did need to do a deal or face continued pressure from private equity investment firms to take it over. With the DM&E and its Powder River project the new debt and related obligations will make the combined company a much less attractive target. Of course, the merger will still be required to pass the full STB Class 1 merger scrutiny, although it will likely be deemed a “minor transaction”. Remember that a takeover of the KCS has already been deemed a minor transaction by STB.
LC
Sorry, I had just assumed that ICE would be part of the deal. By the way, wasn’t the ICE initially owned by CP?
Gabe
CP used to own the old ICE trackage under its SOO brand (SOO aquiring it from its purchase of the Milwaukee Road). Hopefully I will be able to see some periodic white and red SOO’s running through Genoa again.
I think CP will be a good fit in this, they seem to me to be a great company. Also doesn’t this put the core of the MILW back in the hands of a single company again.
Freaking HILARIOUS!!!
Could not help myself today I remember reading and hearing all the fights that DM&E was having with Rochestor and esp MAYO Clinic. The head of the Mayo Clinic today probaly needed Maylaox after reading that in the local paper knowing that they just lost big time. I looked at the CP rail system they will be able to haul PRB coal all the way to Philly if they want now and NOT even have to interchange it at all with the system they have.
Interesting, that CP doesn’t appear too optimistic about the Powder River Basin, if you ask me. From the press release: Future contingent payments of US$350 million will become due if construction starts on the Powder River Basin expansion project prior to December 31, 2025. DM&E was always on the verge of starting tommorrow. CP thinks sometime in the next 18 years?
It might not be necessary to climb over ourselves to get photos of the blue & yellow livery before it disappears just yet. It seems CPR has been pretty slow about repainting the SOO units (but I’m glad I got all the photos I have so far).
I wonder what effect this will have on the DME/ICE employees? Major cutbacks? Mergers always mean belt-tightening (except for the execs who either get big bonuses or major severance packages).
The part of this that really has me laughing is the effect on BNSF. I just have to believe that BNSF had a hand in a considerable amount of the resistance that was stired up over this expansion.
Had it worked out the way DM&E wanted, they might have been able to continue to act as an indepentent carrier–which would not be as competitive against UP/BNSF–while conducting the PRB expansion. But, because BNSF won the battle, they are going to lose the war by having a high-roller/Class I competing in the PRB instead of a regional.
I think BNSF would have been better off had they bankrolled the project for DM&E.
Gabe