KCS/CP Merger Discussion

The UP - SP merger certainly wasn't good for CP/Soo.

Somehow I missed these press releases ...

CP Sets Dec. 8 Date for Special Meeting of Shareholders to vote on CP-KCS Merger Agreement
https://www.prnewswire.com/news-release ... 15872.html

CALGARY, AB, Nov. 3, 2021 /PRNewswire/ - Canadian Pacific Railway Limited (TSX: CP) (NYSE: CP) ("CP") today announced that it has scheduled a virtual Special Meeting of Shareholders ("Special Meeting") on Dec. 8, 2021 at 11 a.m. ET (9 a.m. MT) for shareholders to vote on the issuance of the CP common shares to KCS stockholders in connection with the proposed business combination with Kansas City Southern ("KCS").

All shareholders of record of CP common stock as of the close of business on Nov. 1, 2021 will be entitled to vote their shares at the Special Meeting.

"We are pleased to ask our shareholders to support this unique, once-in-a-lifetime partnership to create the first U.S.-Mexico-Canada rail network," said Keith Creel, CP President and CEO. "This end-to-end combination is an extraordinary opportunity to inject new competition and capacity into the U.S. rail network and unlock new environmentally-friendly transportation options that will grow the USMCA economy."

Kansas City Southern Sets Special Meeting Date for Vote on Combination With CP
https://investors.kcsouthern.com/news-r ... sc_lang=en

KANSAS CITY, Mo.--(BUSINESS WIRE)-- Kansas City Southern (NYSE: KSU) (“KCS”) today announced that the Company has scheduled a virtual Special Meeting of Stockholders (“Special Meeting”) to vote on the proposed combination with Canadian Pacific Railway Limited (TSX: CP) (NYSE: CP) (“CP”) on December 10, 2021 at 10 a.m. Eastern Time (9 a.m. Central Time). All stockholders of record of KCS common stock and KCS 4% non-cumulative preferred stock as of the close of business on October 14, 2021, will be entitled to vote their shares at the Special Meeting.

JayBee wrote: ↑Tue Nov 23, 2021 8:43 pm The UP - SP merger certainly wasn't good for CP/Soo.

That makes no sense, considering the complete lack of overlap or even regional significance between SP and CP.

eolesen wrote: ↑Thu Nov 25, 2021 1:22 am

JayBee wrote: ↑Tue Nov 23, 2021 8:43 pm The UP - SP merger certainly wasn't good for CP/Soo.

That makes no sense, considering the complete lack of overlap or even regional significance between SP and CP.

SP was Soo Line's biggest interchange partner at KC prior to SP merging into UP and provided CP with three doublestack trains per week. In addition Trains 226/227 were dedicated to traffic for SP, while 220/221 handled all the traffic for UP/AT&SF/KCS at Kansas City. Or perhaps you forgot about the period after Soo Line acquired MILW in 1985 until the SP was acquired by UP, and AT&SF was merged into BN. After those two happened interchange at KC dwindled to the point that CP sold the line to Kansas City to Dennis Washington and it became I&M Rail Link.

Three trains per week isn't serious impact...

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eolesen wrote: ↑Thu Nov 25, 2021 9:15 pm Three trains per week isn't serious impact...

Added to a solid manifest each way it is. Plus there was another block in the 430/431 train out of St. Paul. The traffic from the other three Class I carriers plus KCT was handled by just one train.

Yeah, you're focused on 1985 to 1994, but keep in mind little to none of that interchange traffic existed prior to 1980. That's when Cotton Belt picked up was originally the Rock Island's Golden State (KC to Tucumcari and El Paso); prior to that, the Rock kept that traffic.

From Hampton Inn - Castleton - Indianapolis---

Mr. Olesen, a point of order; Rock Island end of track was actually Santa Rosa, NM vice Tucumcari, even if as you note, the operational interchange was at the latter.

The Mexican regulatory agency has approved CPKC, without any conditions as far as I know...

From Canadian Pacific:

Canadian Pacific Railway Limited (TSX: CP, NYSE: CP) ("CP") and Kansas City Southern (NYSE: KSU) ("KCS") today announced that they have received the required regulatory pre-transaction control approvals from the Mexican Federal Economic Competition Commission ("COFECE") and the Mexican Federal Telecommunications Institute ("IFT") for the previously announced proposed combination of KCS and CP.

https://www.cpr.ca/en/media/canadian-pa ... -approvals

Is there a link to the COFECE or IFT written decision in English? Is there even a published written decision?

eolesen wrote: ↑Fri Nov 26, 2021 2:10 am Yeah, you're focused on 1985 to 1994, but keep in mind little to none of that interchange traffic existed prior to 1980. That's when Cotton Belt picked up was originally the Rock Island's Golden State (KC to Tucumcari and El Paso); prior to that, the Rock kept that traffic.

The traffic into Kansas City prior to 1/1/86, the date when Soo Line took over the MILW really doesn't matter as CP through Soo Line had no access to it.

I also forgot to mention the other significant interchange partner at KC, the Missouri - Kansas - Texas RR. The UP, ATSF, and BN had every incentive to keep traffic on their own lines for as great a distance as possible, so unless the traffic was destined for some point on Soo(CP) in the Quad Cities or Muscatine they would interchange Traffic at Chicago or the Twin Cities.

The loss of traffic from both, SSW(SP and DRGW), and MKT, at KC following their acquisition by UP is what lead CP to sell the "Corn Lines" to Washington Group.

Lots of CPKC news today! Most importantly, 99.9% of CP shareholders have approved the merger!

From Trains Magazine:

CALGARY, Alberta – Canadian Pacific shareholders today overwhelmingly approved the railway’s proposed merger with Kansas City Southern.

https://www.trains.com/trn/news-reviews ... rn-merger/

I also find it interesting that shareholders got to vote on the name of the new company. 99.8% of shareholders voted to change the name to "Canadian Pacific Kansas City Limited," which will only take effect if the merger is approved by the STB. The voting trust should take effect soon. We'll start seeing a lot of CP power on KCS and vice versa real soon!

In an effort to win support from the more passenger-oriented groups, CPKC said they would allow a single Amtrak New Orleans-Baton Rouge round trip per day. CP and the State of Louisana seem to be in agreement that the line would have to be upgraded from 25 mph to 49 mph before any service can begin. Louisana has already started the process to secure the needed funding. Any other round trips would require more substantial infrastructure upgrades such as CTC. CP also said they would be cooperative in any attempts to add a Dallas-Meridan segment of the Crescent via the Meridan Speedway.

From Trains Magazine:

NEW ORLEANS — A senior Canadian Pacific official told New Orleans and Baton Rouge, La., civic leaders on Wednesday that the railroad will permit a single passenger round trip between the two cities, without any infrastructure improvements, if CP’s merger with Kansas City Southern is approved by the Surface Transportation Board.

https://www.trains.com/trn/news-reviews ... -approved/

One more approval needed before CP can purchase KCS and place it in a Trust. KCS shareholder's have to approve the deal, they vote this Friday December 10th, 2021.

JayBee wrote: ↑Wed Dec 08, 2021 7:03 pm One more approval needed before CP can purchase KCS and place it in a Trust. KCS shareholder's have to approve the deal, they vote this Friday December 10th, 2021.

I stand corrected. Considering 99.9% of CP shareholders approved, KCS shareholders will probably do so as well. Thanks!

Shortline614 wrote: ↑Wed Dec 08, 2021 7:15 pmI stand corrected. Considering 99.9% of CP shareholders approved, KCS shareholders will probably do so as well. Thanks!

It is a payday for KCS shareholders whether or not the STB eventually approves the merger. It seems like an easy decision to me. The only reason to say no would be if there was a better offer that could actually reach this level of approval.

Excerpt of an STB filing of Thursday 1/9/21 from an individual voicing his opposition to CP's proposal to acquire KCS - I guess anybody with a collection of ideology axes to grind can file with the STB:

"To: The Honorable Surface Transportation Board Members
From: John E. Musser
243 Buena Vasta Ave 1316
Sunnyvale, CA 94086
[email protected]
Subject: Stop North American Railway Merger

I urge you to do everything in your power to stop the merger of Canadian Pacific and Kansas City Southern. This new "North American railway" will hasten the decimation of U.S. independence, and the merger of North America into an EU-like arrangement.

Congress must introduce legislation withdrawing the U.S. from the United States-Mexico-Canada Agreement, repealing the USMCA Implementation Act of 2020..."

https://www.trainorders.com/discussion/ ... 303306.pdf