THE LATEST RUMORS GOING THROUGH THE GRAPEVINE FROM THE UNION(BROTHERHOOD OF LOCOMOTIVE ENGINEERS) IS THAT UNION PACIFIC JUST SOLD OF A MAJOR TRUCKING ASSET TO HAVE A LARGE AMOUNT OF CASH ON HAND. I HAVE ON A RELIABLE SOURCE THAT THEY ARE LOOKING FOR A THROUGH ROUTE TO THE EAST. NOW WE ALL KNOW THAT CSX’S FIVE YEAR NO SALE MORITORIUM EXPIRED THIS YEAR. TO GOOD TO BE TRUE OR JUST ANOTHER PIPE DREAM. DON’T FORGET HOW THEY SLAMMED THE BRAKES ON CN-BNSF!!!
This is pure roundhouse rumor. CSX has a market cap of $6.5Billion+. UP is doing an IPO for Overnite, its trucking arm will bring about $600Million. In other words up will have less than 10% of the cash it needs to buy CSX from this sale. That’s a lot of borrowing. Sorry, but the geniuses of the roundhouse need to head back for their MBAs…lol…
LC
THE WHOLE THING IS THOUGH IT IS NOT ALL OF CSX, JUST CERTAIN SEGMENTS THAT WILL ALLOW ACCESS TO THE EAST COAST MARKETS. THAT IS WHAT MAKES IT FEASIBLE
My opinion is wait and see.We have a lot of run through power here in Defiance.I could see why UP would like the old B&O line.
Stay safe
Joe
When that big economic blow out occurs, the first railroads in trouble will be outfits with heavy debt service, like CSX and NS. They have to make so much a day just to pay for Conrail. Also, I don’t know if the UP could cherrypick parts of a large system like that.
Not gonna happen. For a Class 1 to buy even a single line from another Class 1 requires the same analysis by the STB including all the hearings, litigation and everything that a full blown merger would require.
Second, if UP were to buy such a line from CSX it would seriously damage the value of the remaining portions of CSX and bring a flood of shareholder lawsuits alleging mismanagement and fraud. I would also expect that the Justice Department could get involved given the question of monopoly on coast to coast traffic would be raised for the first time.
Nope, just another rumor.
LC
WHAT ABOUT THE CANADIEN CONNECTION THOUGH. THE SECOND LARGEST BY VOLUME IN THE NORTH EAST
What about it?? Are you saying U.P. will buy it?? Never happen.
TIM A
Ok - let’s throw something else into the mix. Is it ever a possibility that the UP/BNSF would ever “partner” with any of the others. Not merge, but form some kind of an alliance. (I know I am way in over my head here, but something about business and strange bedfellows)
Jen
Jen, that’s already done…look at this new UP-CSX UPS train. NS and BNSF have similar arrangements in different markets, and I know that UP has sme trains that NS forwards to the east coast. That’s really about as much of an alliance as they need. (I haven’t heard about any big BNSF-CSX partnership, but I’m sure there are some places where they cooperate.)
As far as I know, the situation hasn’t changed from a couple of years ago…UP doesn’t want to merge with either of the eastern railroads. If UP merged with, say, CSX, they would only gain all of the business that CSX now gives to BNSF. Meanwhile, BNSF would have to merge with NS at that point, so the NS business that had gone to the UP would be lost. Since UP has the bigger share of both, it would stand to lose more in a merger. (I’m surprised BNSF isn’t pursuing such a thing!)
As for selling Overnite, it isn’t a done deal yet, and I don’t think that too much should be made of it. UP, for some reason, wants to be known as a railroad company.
I wouldnt say that. limited clear . the reliable sorces i have ( not from the round house) is that the paper work is signed and has been since 1999.the bnsf and the ns. and the bnsf would be the parent company my source has never lied and when he said something would happen it would. why the wait you ask? simple they wanted the ns to pay down the debt on the conrail. We was told about a month ago there was going to be a major annoucment comming. well its been 30 days now and i am waiting .
I cannot believe that Goverment regulators would allow for such a thing to happen. A West railroad mergeing with a East railroad would be grounds for a monopoly. If such a merger were to be attempted, the other railroads, not in the merger, would hold The deal up in litigation for years. We are not just talking Class 1’s, but the short lines, as well, would cause a merger such as that serious problems also. I do not believe a deal such as a coast to coast rail company would ever be approved.
TIM A
It seems really simple, to pair up the two big western roads, two big eastern roads and two Canadian roads to make two very large roads, but there are some problems.
-
All the major US RRs have huge debt as part of previous mergers. None have much borrowing power, so any future merger would likely be a stock deal, not a purchase, so the leader in the merger won’t be able to offer stockholders much of a premium for their stock. This won’t go over well with stockholders who usually demand a premium when being bought out.
-
East-West interchange traffic is fairly well split between the roads. i.e. NS does as much interchange traffic with UP as with BNSF. An east-west merger will make major changes to traffic flows. Changes in traffic flows were the major cause of problems in recent mergers. RRs don’t have enough science behind their operations to effectively deal with major changes to traffic flows - at least not enough to convince customers that were burned in the past.
-
Mega-mergers will produce little hard savings and will be harder to justify. G&A depts like law, accounting, etc, are already a pretty small percentage of overall operations, so eliminating duplicate functions will produce small relative savings.
-
The large roads are already so large that operating managers can’t comprehend the whole property in their minds. VP of Ops just can’t “know” the operations the way they did in the “good old days”. This only gets worse as RRs get bigger.
-
Doing away with interchange simply removes the requirement for reporting. The cars still have to move over the same track! Solving interchange problems with out merging will produce nearly the same benefit.
-
I don’t want to move to Fort Worth or Omaha.
Nicely put. Could not have been said any better.
I’m especially fond of number 6!
Don’t hold your breath.
LC
I’m not sure what relevance this has. I sincerely doubt UP will look to acquire CSX merely to connect with either CN or CP which it already does in several places.
LC
These sorts of rumors are all over the railroads. Sometimes there is a grain of truth in them, most times it’s just someone’s wishful thinking. In any coroporate transaction of size there are significant confidentiality agreements with harsh penalties and also Federal and State securities laws with criminal sanctions for those who leak this sort of information. This doesn’t mean such information never leaks, but it does make it less likely. It also means it may be purposely distorted or merely used to divert attention from something else.
If I had a nickel for each time the KCS was to be sold in 30 days over the last few years I would be a wealthy man… (for example)
Could it happen, maybe, will it happen, unlikely. If they are waiting for CSX portion of the $10Billion debt from the Conrail acquisition to be paid down, the merger will be announced well after I retire in 16 years or so…
LC
Awhile back the UTU had an article about the possibility of a UP/CSX merger. The article said that CSX had J.D.Power do a survey of rail customers about their rail service and quite a few questions asked about satisfaction of service dealing with the UP.
One customer asked the pollster why they didn’t ask about service from the NS, as this particular customer mainly did business with NS.
The reply was that they were only told to ask about CSX and UP, no one else.
Supposedly, ATSF had J.D.Power do a similar poll that dealt with questions about only the ATSF and BN before their merger.
As for timing, both companies have some good political connections.
Vice President Cheney used to be on the UP Board and CSX’s John Snow is at
treasury.
Also Linda Morgan isn’t going for another term as chair for the STB.
I’m not holding my breath for anything to happen, but you never know.
Hopefully the STB will make sure the railroads get it through their heads to be content on what they have and promote more two-three line interchange rather than more mergers. the dust from UP/SP is finally settling down almost eight years after the merger and CSX/NS/Conrail still are scratching their heads, and as Don pointed out the railroads are so big right now management can’t even comprehend half the time what they have.
Also, from a railroader’s point of view, I would hate to have to move my family from Phoneix AZ on the UP to Boston, MA on the CSX side just to keep my job with a combined UP/CSX system. Not to many options though now days and with more mergers it’s going to only get worse.
–Rusty