STB Refuses Voting Trust For CN-KCS Merger; CP Offer On the Clock

Agreed the Biden administration would probably poo poo the merger; think STB approval will be an uphill battle too.

Looking at the map: KCS makes it as far northeast as Springfield, IL; this and Shreveport, LA would be the two major connections for CN should they acquire KCS.

If the KCS were to merge w/ an eastern carrier, NS is the natural panartner, they have several connections and already have the Meridian speedway panartnership.

While I guess Children's is now the largest CNI shareholder at present, Bill and Melinda I believe owned more. How much is held by the Foundation I know not.

Of course, "post-split", Children's apparently became the largest by default.

Finally lest we forget, the holders of any incorporated entity represents private information and is only disclosed in "bits and pieces" such as when an acquisition is pending.

Gilbert B Norman wrote: ↑Fri Sep 03, 2021 6:15 am Finally lest we forget, the holders of any incorporated entity represents private information and is only disclosed in "bits and pieces" such as when an acquisition is pending.

Since when? Looks pretty public to me: https://money.cnn.com/quote/quote.html?symb=CNI

Mr. Lensovet, I am addressing WHO actually owns the entity.

At this Forum, I personally choose to share my positions whenever they could possibly influence an opinion I choose to express, but again, my choice.

But there is nothing, absent some judicial action, requiring the Union Pacific Corporation to disclose I hold a position - and that is in a broker's ("Street") name.

Now by "bits and pieces" I am referring to that mutual funds, such as Children's, are required to disclose their positions. Bill and Melinda's holdings got aired as their divorce was disclosed. So, as I noted, it is possible for an analyst to "piece together" holders of large positions (certainly not me) who owns what.

Trust this clarifies.

Spot on, Prof. Norman. Institutional ownership only shows the institution holding the shares. It doesn't show the individuals in each fund, and sometimes you have intermediaries between the institution and the individuals...

KANSAS CITY, Mo., September 3, 2021 – Kansas City Southern (NYSE: KSU) (“KCS”) today announced that it has adjourned the Special Meeting of Stockholders (the “Special Meeting”) for KCS stockholders to vote on the previously announced definitive merger agreement with CN (TSX: CNR, NYSE: CNI) and other proposals until 9:00 a.m., Central Time, on September 24, 2021. All stockholders of record of KCS common stock and KCS 4% non-cumulative preferred stock as of the close of business on July 1, 2021 remain entitled to vote their shares at the Special Meeting.

As previously disclosed, KCS is working to evaluate its options and the KCS Board of Directors will continue to make decisions based on the best interests of the Company and its stockholders.

Kansas City Southern Adjourns Special Meeting of Stockholders until September 24, 2021

With KCS running back into the arms of CP, anyone think CP would spin-off any KCS lines? I would guess the old Alton Kanansas City - St. Louis line or line from Meridian, MS north into Tennessee. TBH I completely forgot about the KCS line north of Meridian, MS.

NotYou wrote: ↑Thu Sep 02, 2021 8:40 pm Agreed the Biden administration would probably poo poo the merger; think STB approval will be an uphill battle too.

Looking at the map: KCS makes it as far northeast as Springfield, IL; this and Shreveport, LA would be the two major connections for CN should they acquire KCS.

If the KCS were to merge w/ an eastern carrier, NS is the natural panartner, they have several connections and already have the Meridian speedway panartnership.

Correction: CN would meet w/ KCS at Jackson, MS, not Shreveport, LA.

frequentflyer wrote: ↑Thu Sep 02, 2021 7:51 pm Do not know why I thought KCS had access to Chicago. Forget the CSX idea. Still think the Biden Administration will frown on this merger. Guess we will find out.

KCS only gets as far as Springfield, IL. Only place they touch CP is at KC itself. KC-Chi is former Milwaukee Road trackage I believe.

CSX seems to have put themselves in bad odor with the Feds. Not sure they'd smile on a CSX bid for the KCS.

Mr. Ridgefield, reiterating points I made earlier, the the "Detroit-KC Speedway" exists, but it's the Wabash (route of the "Cannon Ball") that, for better or worse, bypasses Chicago and is now property of Topper (NS).

The CP with their iron clad trackage rights over the NYC Water Level route - and access to the motor vehicle facilities along the Detroit-Toledo route, is in a better position to access auto industry traffic than CN could ever expect to be.

The CN's "Detroit-KC Speedway" that they have touted in their "marry me, marry me" rhetoric comprises a "Sheet Music Clef" route touching both Lansing as well as South Bend. True, when the CN was in their early '60's passenger train initiative and Central had only "out" in mind, their "Maple Leaf" matched NYC's Detroit Chi time.

But that involved "giving that train the railroad" which is something that doesn't happen with freight (regardless of what the Traffic Department tells the shipper).

Continuing with the CN's "Speedway", yes, acquisition of the "J" has expedited movement around Chicago, and the IC Markham-Gillman is FRA Class 4 (has Amtrak trains). Likely Gillman-Springfield is Class 3.

But now we are on to the GM&O (KCS nowadays) which if that is Class 3 I'd be amazed, and likely is Class 2. Now the bridge over "Ol' Man River"; bet Class 1 and any train of size would need be "doubled" over such. Onward through MO to KC, I'm guessing Class 2.

Now if I have understated the condition of CN's "Speedway" I'll stand corrected, but if I'm "in the league" we are looking at 36hr train time Det-KC.

True, "my MILW" is probably only Class 2 nowadays (that's all it would have deteriorated to Elgin-Savanna after A-Day), but it is a "mite bit more" direct than what CN would have to cobble together.

So all told, if CN wants to make a "marry me" case, it's not going on the base of a "Det-KC Speedway".

Gilbert B Norman wrote: ↑Tue Sep 07, 2021 2:03 pm .

The CP with their iron clad trackage rights over the NYC Water Level route - and access to the motor vehicle facilities along the Detroit-Toledo route, is in a better position to access auto industry traffic than CN could ever expect to be.

CP does not have access to any Auto Plants in Michigan or Indiana. Its trackage rights are strictly overhead rights between Chicago and Detroit. They are via the Water Level Route from Chicago to Butler, IN and then over the former Wabash to Delray Tower. Then a short piece of CASO to just short of the Detroit River Tunnel where it gains home rails. CP does have access to Auto plants in Canada, and of course the Autos sorted by IHB at Gibson Yard.

Thank you Mr. JayBee; I will stand corrected, and now informed, on that point.

CP has full access, as you note, to CRSA as well as of course auto manufacturing facilities in Canada - all of which enables them to be in a strong competitive position to handle auto parts to the assembly plants around KC with NS. Again, CN's "sheet music clef" across Michigan and Indiana to a Class 2 X-ing of Missouri could hardly be deemed "competitive".

All told, I think that if CN is to prevail - even if their piggy bank is fatter than CP's - they will need to find another means to show the STB their combination will enhance competition. I'm at a loss to think of one.

Gilbert B Norman wrote:The CP with their iron clad trackage rights over the NYC Water Level route - and access to the motor vehicle facilities along the Detroit-Toledo route, is in a better position to access auto industry traffic than CN could ever expect to be.

GBN, you have said on several occasions that the CN-KCS "Kansas City Speedway" would not be competitive with NS's Wabash, and now you come out and say that CPKC would be in a better position to compete? I am at a loss. Detroit-Chicago has always been a problem for CP, stemming from the fact they have to use Norfolk Southern's line. Using trackage rights over your biggest competitor has never been a recipe for success. D&H anyone? Those trains will be screwed over by the dispatcher even worse then Amtrak, which is really saying something. Not to mention that the ex-MILW Chicago-Kansas City line isn't exactly competitive with anything already.

I began to think of a way for CPKC to get out of this predicament. At first I thought CPKC could upgrade the former Gateway Western then secure haulage rights over the ex-Wabash between Springfield and Detroit, but that has the same problem as the current Water Level Route rights - using the railroad of your biggest competitor to compete with them. A straight no go. Things seem to be a little hopeless.

I can see a way out though. Revive an old SP plan to upgrade the ex-MILW Chicago-Kansas City line to Class III (40 mph). The IHB, which CPKC will have a 49% stake in, would be used to navigate Chicago. CPKC and CSX could then form a Meridian Speedway-style joint venture consisting of the ex-Pere Marquette between the IHB connection in Gibson, Indiana, and Fullerton Wye in Detroit. CPKC could then use trackage rights between Fullerton Wye and the Detroit River Tunnel. No need to secure haulage new rights. No need to spend upwards of 300 million to upgrade a line to nowhere. CPKC still would not match NS's Wabash, but it would give them a fighting chance.

All told, I think that if CN is to prevail - even if their piggy bank is fatter than CP's - they will need to find another means to show the STB their combination will enhance competition. I'm at a loss to think of one.

The only way I think CN could get approval to buy KCS is if they gave the Kansas City-Shreveport-New Orleans line, Shreveport-Jackson-Mobile trackage rights to CP. That way CP gets some of what it wants (access to the Gulf of Mexico), while CN gets some of what it wants (access to Mexico).

Mr. Shortline, I apologize if my postings have not been consistent. To clarify some of the Alphabet Soup here, I will address roads, both present and predecessor, with their full titles.

OK; let's retrace, if in fact Canadian National has been touting some kind of Detroit-KC Speedway that could be competitive with the Norfolk Southern's "Wabash Cannon Ball" route, I am at a loss where they are coming from. Their existing Grand Trunk Ry between Detroit-and Chicago resembles a "Music Clef" touching both Lansing and South Bend. Now true, Canadian National's acquisition of the Elgin, Joliet, and Eastern has made their "navigation through the shoals" of Chicago railroads easier and under their control, that their Illinois Central is Class 4 (it has Amtrak passenger trains; and to my knowledge such is required to operate such) Markham-Gillman and Class 3 beyond to Springfield helps, but if the Gulf, Mobile & Ohio now owned by the Kansas City Southern Springfield to Kansas City is higher than Class 2, I'd be amazed.

I'd estimate "if the sun, moon, and stars all fell into alignment" we are still looking at 36 hours Detroit-Kansas City. What Big Three automakers will stand for that - especially when talking I'd guess 20 hours over the Wabash.

I'll stand corrected if the Canadian Pacific does not have access to all the Detroit-Windsor auto parts manufacturing that apparently I thought. CP does have access in Detroit to Conrail Shared Assets - and that is a lot of manufacturing facilities for both "home made" (by Big Three themselves) and "purchased parts" (third party vendors that could sell to GM as easily as to Ford).

Now "my (I was with them 70-81) Milwaukee Road" has its "sort of Chicago-Kansas City" direct routing, but I'd guess not much more than Class 2. With their 49% of the Indiana Harbor Belt (NS and CSX the rest) along with whatever overhead trackage rights the Canadian Pacific enjoys over the Norfolk Southern's New York Central Water Level Route puts them in a far more competitive position for this auto industry traffic and their "just in time" delivery requirements, than the Canadian National could be. I'm certain that Canadian Pacific could find the "Loonies" to quickly get the MILW up to Class 3 and "get in the game" for this auto industry business.

All told, if a Canadian National-Kansas City Southern combination is to "sail with the Surfboard" (whoops, be approved by the Surface Transportation Board), they will have to look for other "selling points". So far as I am concerned, they will be hard pressed to find them.

cp once had trackage rights over the ex-PM across Michigan but gave them up 15-20 years ago in favour of cp’s current NS trackage rights across MI. On the map at least, the PM route looks circuitous and much longer