This was on USA Today Website. http://usat.ly/1xHsCO4 Thx IGN
Earlier tonight I saw a blurb roll across the bottom of our local TV newscast. Looking on line I came across this.
So maybe not, as it says CSX rebuffed the proposal. Maybe the beginnings of something interesting though.
Jeff
Perhaps this is a strategy by CP to extract IHB from CSX. Trade the D&H line from Binghamton to Albany area to NS for their share and then reach an agreement for the other portion from CSX and suddenly you have CREATEd your own route thru Chicago.
Of course a merger with CSX would allow a direct route for oil from Chicago to Albany, so either way CP would win. Now, the question is…does anyone in industry take this seriously?
Ed
According to what I have read, CP owns 49% of IHB, and CSX and NS each own 25.5% each, so any deal between CP and either of the eastern roads will gain control of IHB.
My question is this: Would a CSX + CP pairing also give the combined company control of BRC? How about CP+NS?
Yes, I am aware that CSX supposedly said no…but the first shot rarely wins a war. Remember how the Conrail split went down.
EHH has been quoted more than once that he is a believer in the 2 railroad final merger solution.
If CSX says no, there is always NS, KCS, UP and maybe BNSF, although I doubt it. There is always time to stir the pot.
CPSX, here we come…
I do not know what all the hub bub is about. The STB will NEVER allow the merger to of two Class I railroads as this will reduce competition.
Or the start of the final countdown (mollified with trackage rights)?
EHH doesn’t remember the difficulties when CN - of which he was CEO at the time - bought just the EJ&E to get a route around Chicago about 10 years ago ? The epic environmental impact statement that the STB required (butterfly migrations) ? The grade crossing delay timing records scandal and penalties ? The NIMBY town in Illinois ?
And as the failed BNSF-CN merger showed us (pre-EHH), the STB is going to be really tough on these proposals - that one had an 18-month moratorium to start, which effectively killed it (per Rob Krebs/ BNSF and Paul Tellier/ CN). Remember there’s a whole new set of STB rules for these large-scale mergers as a result of that. The shipper groups are going to sit still for this ?
[:-,] So someone thinks it’s a smart idea to go from 2 railroads - each with near-monopoly powers as a ‘bottleneck’ or sole-access carrier at one end of the move or the other, and commensurate opportunities to have larger revenues - on crude-by-rail (or other) moves, and reduce that to just 1 ? Sounds more like an advantage to the shippers to me.
And just how will putting a new sign up - name change only - fix the congestion problems ? What new track, route, or equipment would be added or revised that wouldn’t happen anyhow ? What does this change for the better from an operational standpoint ?
Seems like a classic 1940’s - 1980’s dullard railroad management move - or a merger-and-acquisition banker’s dream of large fees: “We don’t know what else to do to solve our problems or improve the situation - so let’s propose a merger !” Or another stock market manipulator’s “pump-and-dump” scheme - maybe Ackman’s fund isn’t doing too well lately ? Studies have shown that the great majority of mergers/ acquisitions end unfavorably for the acquiring company . . . [sigh]
Like those cultures are go
Agree with Mr. North – a dream for lawyers, a nightmare for everybody else.
BNSF attempted this some years ago (actually they wanted to buy CP and have the two railroads exist as seperate entities but under common ownership). That deal was nixed by regulators North of the Border.
So the question is would the Canadian government feel differently if a Canadian railroad is buying a U.S one rather than the other way around?
I didn’t hear them complaining when CN bought the IC and EJ&E.
No, BNSF is the largest owner of the BRC, but all 6 Class I railroads have some ownership(KCS excepted). CP has the smallest share.
Barrington is the NIMBY Illinois town I meant to name in my previous post (but couldn’t remember its name then).
The more I think about this, the stupider it seems - or maybe Harrison knows better, and is just following orders from Ackman as part of a scheme to run up the CP price (compare Ackman and Herbalife).
The 2 articles in yesterday’s (Tuesday, 14 Oct. 2014) Wall Street Journal echoed parts of what I posted above.
[:-,] Imagine a hearing in front of the STB. First question: “Mr. Harrison, why are you and CSX spending even $1 on this scheme, when neither railroad is on track to fully meet the imminent 2015 deadline - in just 1 year from now - for implementing PTC as required by an Act of Congress and the FRA regulations ?” And it’ll just go downhill from there . . . [sigh]
- Paul North.
Question to self: What is the real reason for the proposed CP + CSX merger proposal? What would each party get? What would CP get? Control of Indiana Harbor Belt and their yards., also control of CSX’s B&OCT, giving the combined company a thru route from Blue Island and Bedford Park to Bensonville and Schiller Park. The ability to close Bensonville and move it’s work to the IHB and sell the property. To O’hare perhaps. A complete south of the lakes line west of Windsor. The possibility of selling off or abandoning the expensive north of the lakes line. .Access to almost all US Atlantic and Gulf ports from Boston to New Orleans for grain and oil shipments. A bigger company for EHH and/or Keith Creel to run What would CSX get? A good main line from Chicago to the twin cities. A secondary line to Kansas City. Direct access to Windsor to Montreal. Loss of BNSF oil traffic. What would William Ackerman / Pershing Square get? CSX. I think I know the answer. Sorry for the squeezed look, the editor has taken out all of the spacing.
WM7471…I think you are on the right track. My thoughts are this is a play for financial gain (isnt all business that?) plus the opportunity for EHH to do something spectacular twice (get a route thru Chicago). Further he could transform CP into a strategic powerhouse with the sale of Bensenville Yard, which would fund a nice dividend to Pershing and provide funding for CTC and capacity increases on the Soo.
If the merger went thru, the amount of debt would probably approach $50B…I dont see that occuring.
Ed
MP173… Don’t think merger Ed. Think co-ordination.
A multinational transportation company set up by Pershing Square to aquire stock and run by EHH & KC.
All CP assets in the US transferred to CSX (Soo, ICE, remainder of D&H).
All CSX assets in Canada transferred to CP.
All nicely co-ordinated and marketed by the paper overlord.
Just a thought.
The Metra Milw west line goes on the north side and it is owned by Metra/RTA.
Metra line could probably be moved to the south along Green Street. All I am saying is real estate is valuable around the airport…actually anywhere in the city.
WM…can you explain the flipping of assets? I dont understand why.
That would still be considerable debt to service. Nothing could go wrong in that scenario…nothing. No drop off in oil, no recession, nothing. Total revenues of the two companies would be $18B per year and $3B would service debt, if not more.
Ed
The merger of a Canadian RAILWAY Company with a United States Railroad Company could keep lawyers busy and off the unemployment line for years. If I recall Grand Trunk Western was the US subsidery of Canadian National. Some parts of the Penn Central Merger STILL have not been settled as in the land around the Niagara Falls Amtrak Station and yard which is controlled by American Underwriters which was left of Penn Central under a paper railroad version of Lehigh Valley.
MP 173. First an admission. I have a gut feeling that Mr. Ackerman has drunk deeply of the Hunter Harrison Kool-Aid and wishes to add a second (this time US) railroad to the Pershing Square portfolio.
That is why, without knowing what is really going on, I believe that throwing the slimey “merger” word out on the table, is just the first salvo of a possible hostle takeover of CSX. A Childrens Fund 2.0, but this time CSX would be dealing with an advisary that is much more estute about North American railroads and politics.
You wanted to know why I suggested transferring all US holdings to the US company and all Canadian holdings to the Canadian company. The reason is political and not financial.
National elections are on the way in both countries. The last thing Mr. A and Mr. H would want is an uproar about a major company being “stolen” across the border.
Imagine if Pershing Square attempted to take over CSX, what could they offer stockholders?
If they could say that the Soo, the D & H (all or part) and control of the IHB would pass to CSX, that might get them a few votes.
Then they could talk about the synergies.
Combining Blue Island and Bedford Park, run one eastbound and one westbound with the larger Blue Island also handling local traffic.
Combine the IHB and B&OCT into one co-ordinated operation, one that could move trains through the city more quickly by reducing the number of yards and stops a train has to make, both for their own trains and any IHB customers.
Increasing the velocity through Chicago is worth millions. Create your own CREATE.
Finally, an overseeing holding company would allow both companies to remain in their respective countries with their respective laws and politici