The Mayo has gotten the first of its wishes, the STB has ruled that the CP acquiring the DM&E will be considered a major transaction, eith all or at least most of what that entails.
All I want to know is WHO Mayo paid off for this one. Since when is a a reginal RR with revenue under 250 million and a class 2 in size being bought out by a Class 1 a Major Transaction. The STB’s own rules state that any RR that as revenue under 250 million being bought by a class 1 is a minor Transaction. That is per the Merer Rules laid down after the collaspe of the CN and BNSF merger. But this is Washington DC we are talking we are talking about and money talks and Mayo has the cash to buy whoever they want like former Senators and Governors as lobbyists.
What an absolutely pathetic move on the part of STB. Lets see, how would CP acquiring DM&E affect competition in rail transportation in Wall, SD - or elsewhere along the route? It certainly doesn’t allow CP to gain more market share in a market in which they already participate. There’s one RR from Winona, MN to Colony, WY today and there will be one after this transaction. Seems there’s nothing for the STB to decide.
I would suggest that BNSF and UP are far more behind this one than Mayo - given that they have something to lose in terms of a 3rd carrier busting up a bit of the monopoly they hold in the Powder River Basin. If you read the BNSF 3rd Qtr earnings release, they tout the fact that coal revenues went up 13% year over year, while units moved remained the same. When you have that kind of pricing power in spite of overall inflation at 2-3%, you’re going to call in the political cards to keep a strangle hold on it.
Citation needed Please provide a link or source.
The most recent bit I was able to uncover from the STB specifically says that the DM&E aquisition is not a “major transaction.” This is dated October 24, 2007:
News Release dated 11-2-07 categorizes it as a “Significant” rather than “Minor” transaction.
I can’t seem to get a link, but look under News Releases, and then by date. It should be the first one or nearly so.
Try this one STB Ruling
Thank you. Yes. That makes sense, since I don’t see how it could not be considered a “significant transaction.” It surely is one. It can’t be considered a minor transaction, even by neutral standards.
I think it will slide through okay no matter how much Mayo whines. The interesting part will be seeing how far Mayo will be prepared to embarass themselves. They’ve pretty much used up all their tricks.
I think they have more tricks. This transaction did not surprise Mayo at all. I believe some “independent” studies will emerge which will delay approval. How many corporations can convince DNR to change a waterway for houses?
From last June
Perhaps so. I noticed that the Iowa DOT and the Iowa Northern Railroad joined the Mayo on this point. Iowa Northern must get a chunk of traffic from them, although I can’t see what difference the CP aquisition would make since DM&E would route over IC&E anyway (unless there’s something I’m missing here.)
I think Mayo will spare no expense in fighting this since this has become more of a battle of wills as far as they’re concerned. I still think that ultimately it will go through. This is a healthy end to end merger with tremendous potential, not only for shippers, but for the economy as a whole, especially if and when they team up with KCS. However, I do wonder what, if any conditions might be made in the interim.
It will be interesting to see, after this is all said and done, just how much effort/expense (from DM&E and CP) will be put into fighting the Rochester coalition. It wouldn’t surprise me if the cost of fighting will eventually exceed what would have been the costs of a little initial cooperation. Especially if you factor in the opportunity cost of the delays in opening up the PRB revenue stream.
My bet is that unlike DM&E, there will be somebody at CP that is smart enough to recognize that reality. [angel]
edited to appease nanaimo73
Anti, CN is buying the EJ&E, while it is CP that is trying to acquire the DME/IC&E.
CP is the good railroad with red AC locomotives and the steam engine. CN is the bad railroad with black locomotives, a long string of accidents, and the former WC and IC.
Careful AG. It was the CP, not the CN.
Is there anyway that CP can appeal this ruling or no?
Ahh you are right, I confused the two cannuck majors. I’ll change the labels, but it still makes me wonder about the substance…
Notwithstanding my lil’ mistake, I still have to wonder how it will all rack up.
I find it amusing that the same people who believe that the Mayo has no business meddling in railroad affairs, fail to recognize that it is equally valid to say that anyone who does not live in in Rochester has no business opining about local quality of life issues specific to those environs.
When it’s one’s own backyard that is involved…it naturally matters more than it will to remote and unqualified critics
If there were cooperation, what would be the end result on the ground?
The DM&E tried to work with Rochestor and the Mayo clinic and had the door SLAMMED in their face. Now a bigger and richer RR comes along to buy the DM&E and Mayo is going to have a stroke because simply CP Rail can outspend Mayo in the legal department and knows the regulations better. Now it will add to the cost of improving the tracks through Rochestor and the surrounding areas but the last merger denied was the SPSF and that was due simply to anticompetive issues all over the SW and the fact the ICC saw the fact the SP would have bankraupted the new company in a few years.
As soon as Rochestor realizes that Mayo is not the only game in town and then gets some new elected officals that will stop basically bending over to them then maybe the probelms would be less. Out of all the communties that are in the route of the proposed expansion ONLY 2 are against it what does that tell you the final tally is 54 for and 2 against.
What I can’t get over is how my home state of Iowa (Iowa D.O.T.) is getting all lathered up about this. What makes it ironic is that, back in 1997, when CP was in the process of getting ready to sell the “Kansas City Corn Lines”, the Iowa D.O.T. was able to stall the potential sale; wanting more “information”. And now, they’re wanting more “info” again? WTF??
What makes this even more irratating to me is how Mayo “welcomed” the chance to work with a new owner when CP made the acquisition announcement back on September 5. Well, looks to me like Mayo has effectively piddled all over whatever chance they had to forge a good working relationship with CP. Now I CANNOT wait for my employer to make the Mayo Clinic look like the bunch of pompous a-hole idiots they really are.
I think Mayo will get what they want. The only question is, “what do they want?”
The only thing Mayo will “get” is delaying the inevitable by a few months; after which CP will be able to say “SCOREBOARD”.
This was not a move by Mayo, but the Iowa DOT and Iowa Northern RR along with others. One needs to look and read the filings from the interested parties in case FD_35081_0. The STB has every right to demand more information about a transaction. Deal with it.
I think this decision also implies that the CN + EJ&E will also be considered a “significant” transaction which must displease CN. As far as DM&E and IC&E becoming “Class I” carriers as a result of this transaction, probably only if the PRB extension is built.
As far as the CP and the Mayo Clinic goes, I think the CP has two choices, either fight Mayo to the bitter end, or fight for the option to route coal via the IC&E. A Rochester bypass would almost certainly be so expensive as to make the PRB project unfeaseable, the economics of operating via the IC&E may also be too expensive to make the PRB project happen.
The IANR is probably looking for what it can get out of the deal, perhaps trackage rights to Chicago.