• Proposed Norfolk Southern NS Canadian Pacific CP Acq/Merger

  • For topics on Class I and II passenger and freight operations more general in nature and not specifically related to a specific railroad with its own forum.
For topics on Class I and II passenger and freight operations more general in nature and not specifically related to a specific railroad with its own forum.

Moderator: Jeff Smith

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  by Gilbert B Norman
 
Final nail in the coffin?

http://www.wsj.com/articles/senators-ra ... 1457112658" onclick="window.open(this.href);return false;

Fair Use:
Canadian Pacific Railway Ltd. ’s bid to acquire Norfolk Southern Corp. faces another obstacle as the top two members of a U.S. Senate subcommittee for antitrust matters are raising concerns about the deal.

Sens. Mike Lee (R., Utah) and Amy Klobuchar (D., Minn.) sent a letter to the U.S. attorney general’s office Friday about a voting-trust plan involving Canadian Pacific’s chief executive. In the letter, the senators say the trust proposed by Canadian Pacific could limit railroad regulators’ ability to “protect competition and the public interest.”

Canadian Pacific declined to comment on the letter. Its chief executive, Hunter Harrison, said this week the company remains committed to its roughly $30 billion bid to acquire Norfolk Southern. Norfolk Southern has rebuffed the cash-and-stock bid, citing regulatory concerns and arguing the offer is too low. The offer was made public last November.

The letter is addressed to Assistant Attorney General William Baer of the Justice Department’s antitrust division, whom the senators are asking to assist in evaluating the voting trust. It was sent after Canadian Pacific on Wednesday said it had petitioned the U.S. Surface Transportation Board, whose approval is required for rail mergers, for an order declaring that the voting-trust structure is acceptable.
I don't know how much more opposition Eddie and Yäger can expect to generate and have a prayer for this combination.

note: the revived proposal for a CP-CSX combination is being discussed here
  by Zeke
 
Mr. Norman I have been hearing thru the grapevine there is a major fissure among investors and many shippers looking to support Ackmans run on the current management. Most of these folks are quite savvy and realize NS maybe better off with a change in management and desire to give CP a chance at getting the place shaped up. I think win, lose or draw the whole ball of wax will be rolled out at the spring shareholders meeting which should be quite a show. Ackman has plan B up his sleeve installing EHH as CEO and boring away from within. I do not underestimate these two fellows nor do I think they will rollover. Pershing Square has taken a beating the past months and wild Bill sees dollar signs if he can pull this off. If not he is hedging CSX and if successfully acquiring that company should scare NS more as EHH will definitely play hard ball against them in their shared markets. I have to say I enjoy seeing NS management roasting nicely on the dynamic duos barbecue spit. LOL
  by newpylong
 
I've said it before and I will say it again, this was nothing more than a move by EHH to prop CP stock up. This is nothing more than the railroad of the week he wants to sink his teeth into. CSX last year, NS this year, back to CSX or someone else next. He may be a baby and an a hole but he isn't stupid. The merger never stood a chance, especially with regulators.

Zeke, besides your obvious distaste for NS management, what major NS shipper supports a hypothetical merger? So far all the letters and intents to partcipate with the STB have been anti merger. Surely you aren't at such a high level of moon hoax theory that you think NS is pressuring each and every shipper?
  by Zeke
 
Newpy of course they are pressuring the shippers. It is what they do best intimidate and retaliate. I believe I have laid out a good case for CP and again NS is not a privately held corporation. It must answer to its shareholders and in my opinion a large number of stakeholders apparently agree that the company is mismanaged and not operating at it's full potential.

Fred Fraily, Trains magazine columnist, thinks the non binding proposal to at least talk to CP will pass at the NS spring shareholder meeting by a large percentage and alludes NS hired army of lobbyists pressuring pols and shippers to fend off CP is going against the wishes of shareholders. The NS spring meeting will be the final arbiter of this interesting saga. Moon hoax ...ehhh I like it. LOL
  by newpylong
 
You haven't answered the question - what major NS shipper has spoken favorably of a possible merger?

So far I have heard a lot of conjecture and no facts. One columnist thinks shareholders are going to at least listen to CP? Gee that sounds like everyone is on board.

As an NS shareholder I can tell you the company could have better operating ratios but I would never support ANY merger especially with CP.

Never going to happen. Get over it.
  by Zeke
 
Major Canadian shippers are in favor of the merger. The major US/NS customers are not going to come out and support CP, reasoning if CP fails in it's quest, their stuck holding the bag as the dynamic duo head back to Calgary. They are playing along and sniffing the wind. EHH alluded to this remarking many major NS shippers have approached him off the record either telling him they privately support the combine and fear retaliation if they come out publicly for CP. If this is true and not a self serving EHH statement we shall soon find out ! Shipper support is running 3 to 1 in favor of the combo on the STB site. Most all of the short lines in NS orbit state NS really pays close attention to their needs and those with CP experience report in their statement CP seemed uninterested in them probably due to low profit margins on their traffic. The NS spring shareholders meeting is either the next or maybe the final step in the deal. I own a block of NS stock too and will vote for the merger talks.
  by newpylong
 
But what about NS shippers on record? A company say the size of UPS or JB Hunt fearing retaliation is a little over the top fear mongering.

What are some STB docket numbers for the filings supporting the merger? I've yet to see one and if 3 to 1 favor I must either be blind or on the wrong STB site.
  by mtuandrew
 
Though EHH and Ackman wanted to be able to purchase NS (or CSX), this serves as a challenge to regulators too. That is, "give us a yes or no answer, STB (and both Canadian and American lawmakers.) Will you ever allow a "final round" of mergers, or are we stuck here for the foreseeable future?"

If CP persisted, I'd look for NS to tender an offer for KCS or vice versa.
  by Jeff Smith
 
JMHO, but would a merger that leaves fewer railroads REALLY be a monopoly, or duopoly? I.e. would a CP/NS combo, matched up with UP or BNSF merging with CSX, really be bad? We no longer have the ICC setting tariffs... the trucking industry continues to compete. With STB protections for shippers on lines that might otherwise end up abandoned, is it really that bad if it strengthens an industry that is seeing far fewer coal shipments? Throw in some protections for Amtrak, this might be a good thing.
  by Zeke
 
I wonder the same thing. The shippers on the one hand fear captivity and the Railroads turning the screws up on rates like they have done to power companies using coal. On the other hand the railroads barely earn enough to meet all of their capitol infrastructure and maintenance requirements. Reading about the failed Time Warner / Comcast merger the Federal Trade Commission, in it's ruling striking down the merger, stated they will not approve mergers in concentrated industries. At this point it appears shippers and pols in their pocket's would raise hell if they tried to merge into two railroads in the US. I think the status quo is what we will see in the coming decade. I do think CP-NS is doable as EHH has pointed out it would still be smaller than BNSF or UP.

From the CP web site dated 02/25/2016

"CP has received over 80 letters of support from a broad cross section of customers. 62 of the letters have been posted to the STB website. That brings the number of letters from shippers in support of the CP-NS combination to more than three for every one shipper letter in opposition." Newpy I'm only the messenger but it appears CP is not moon hoaxing as most all of the Canadian players including the third largest intermodal shipper Trans X is on board.
  by newpylong
 
Zeke wrote:"CP has received over 80 letters of support from a broad cross section of customers. 62 of the letters have been posted to the STB website. That brings the number of letters from shippers in support of the CP-NS combination to more than three for every one shipper letter in opposition." Newpy I'm only the messenger but it appears CP is not moon hoaxing as most all of the Canadian players including the third largest intermodal shipper Trans X is on board.
How about NS customers?
  by Jeff Smith
 
Progressive

SNIPS
CP considering legal options against some merger opponents

Other Class I railroads are working collectively to block CP's effort to "create a pro-customer, competition-enhancing combination" with NS, CP officials said in a prepared statement.

"It is unfortunate that CP must consider the use of litigation to ensure a level playing field and protect its rights, but the company has concluded that the actions of those competitors should not be allowed to block the creation of a railroad that offers unparalleled customer service and competitive rates that will support the success of the shippers, the industries it serves and the broader economy," CP officials said.
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