Why didn’t this happen?
The Interstate Commerce Commission disallowed the merger over concerns about creating a railroad monopoly across Arizona and New Mexico. Considering too the much smaller presence of Union Pacific (in southern California) and the Western Pacific / Sacramento Northern / Tidewater & Southern lines in northern California (WP, SN, and TS were all merged into U.P. at the time), SPSF would have had quite a lock on most of California as well.
An observant friend of mine who works with the Union Pacific Railroad is the only U.P. employee I ever met who actually supported the merger. “Heck,” he told me once, “if the supremely arrogant and financially shaky Southern Pacific ever gets in bed with the friendly, innovative, customer-focused Santa Fe, those two corporate cultures will kill each other. It’ll be Penn Central all over again, and Union Pacific will be there to cherry pick the pieces!”
Doesn’t the UP have that now?
No, because the BNSF is strong in all three states.
I have read that SantaFe walked away from the disallowed merger with all of SP’s nonrailroad properties, thus stripping the SP of some very valuable pieces. Did that occur? If so, why did SP agree to a merger proposal that would have allowed this?
Hopefully someone with all the details will chime in, but my memory is that SP went along with it because SP was part of it.
When the merger happened, the two companies did merge. When the ICC said no, the two companies together (now one) spun off the SP railroad.
At the holding company level Southern Pacific Corporation acquired Santa Fe Industries. The two railroads were, at that time, waiting for the ICC’s ruling on their merger application. The new holding company was calll Santa Fe Southern Pacific Corporation.
It’s something of a sign of how confident that the two managments were that the merger would be OK’d to the point where they went ahead with the holding company combination. When the ICC turned down the railroad’s merger ( Twice if I recall correctly, second time they were going to sell most of the old Central Pacific to Rio Grande plus a lot of other concessions. ) the holding company sold the SP to the Rio Grande and changed their name to Santa Fe Pacific Corporation.
Technically the holding company that was left after the SP & ATSF debacle was actually the Southern Pacific, so logically it retained most of the SP’s non-rail assets. Santa Fe Pacific Corporation was what Burlington Northern Inc acquired in 1995 to form BNSF Inc.
What a tangled web we do weave.
Mark Gosdin
Because UP didn’t WANT it to happen.[:(!] There were a lot of yellow Mercedes’ in the ICC parking lot the day after the merger was denied.[;)]
That was a long time ago already…another reason to feel old.
The merger was first proposed in 1983 and rejected by the ICC August 4, 1986. What is mostly remembered by this merger-that-never-happened was both carriers starting in 1985 began repainting locomotives into what would have become the SPSF. However, there was other silly waste-of-money spending projects that took place on both sides. In 1986, Santa Fe was so sure that the merger was going to be approved, a mainline transfer track was built @ Hutchinson,KS to divert traffic to & from the SSW Golden State line there. Merger denied, track then taken back up and was never used. A decade later, the UP-SP merger took effect, UP was granted rights on SF from Hutchinson to Chicago. The mainline transfer was then put back in @ the exact same spot. Atleast this time it was used and a return on investment was gained.
So it sounds like the partners were willing but not ‘smart enough’ to make a go of it besides it being disallowed at the governmental level.
What would an advantage of this union have been? A disadvantage? More than one of either side?
One of the very first things that Santa Fe and SP senior management did after announcing the railroad merger was to merge the two holding companies and make the headquarters the top floor of the Railway Exchange Building in Chicago, IL. Once the rail merger was disallowed by the ICC, Santa Fe was ordered to divest itself of the Southern Pacific Railroad, but the ICC had no jurisdiction over the holding company, which included an incredible amount of land in California, plus substantial mining interests in the state of Nevada. The real estate holdings were spun off in 1990 as a new company called Catellus, which was recently purchased by ProLogis. The mining interests were also spun off a few years later, ultimately clearing the way for BN to acquire Santa Fe since the company was now a “pure” railroad, and could be properly valued for merger or acquisition.
Probably the most interesting aspect to all of this was the fact that the senior manager in charge of Santa Fe’s nonrail assets before 1989 was none other than Robert D. Krebs. While our former leader was not happy about this at the time this did keep him out of the line of fire, and he ended up being “the last man standing” after the merger fiasco. Thus, the Board turned to him, the ex-SP’er to create the New Santa Fe.
Jim Giblin
Ah yes, the Kodachromes! Red and yellow engines with either SP or SF on the sides. After the merger was denied, I understand SPSF came to stand for “Shouldn’t Paint So Fast.” [(-D]
Being a Grande fan, I can’t help but wonder where the Grande would have ended up if the merger had gone through. Would Anschutz have stayed in the RR business?
Now I gotta go do something to get that [censored] Paul Simon song outta my head. [banghead]