Who's Next on the Merger List?

So who do you think is next? What candidates are out there for a merger/takeover situation after CP-KCS?

Since CN was denied, any chance they start talking to UP, who've they started a cooperative agreement with?

https://www.cn.ca/en/news/2023/04/cn-up ... nada-inte/

CN, UP, and GMXT Announce New Transformational Mexico-US-Canada Intermodal Service

MONTREAL, April 24, 2023 (GLOBE NEWSWIRE) -- CN (TSX: CNR) (NYSE: CNI) Union Pacific Railroad (NYSE: UNP) and GMXT (BMV: GMXT) proudly announced today the creation of Falcon Premium intermodal service, a best-in-class Mexico-US-Canada service with a seamless rail connection in Chicago, Illinois. It will directly connect all CN origin points within Canada and Detroit, Michigan to GMXT terminals in Mexico: Monterrey, Nuevo Leon, and Silao, Guanajuato. This service will directly benefit intermodal customers shipping automotive parts, food, FAK (freight all kinds), home appliances, and temperature-controlled products.
....

It appears to me that the likelihood of an American Class I merging with another is not good. Who else could CN go after?

For that matter, which Class I could potentially be looking at Class II railroads?

If anything, I see more Class II being spun off from CPKC.

The next merger will create a duopoly amongst The Final Four. However, it's not going to happen overnight.

The Canadians now have "balanced US systems; any further intra-continental combinations will be directed towards Mexico. Lest we forget, KCS-M represents a franchise, i.e. we have contracted with you for delineated consideration (likely including "no MEXTRAK") to operate our railroad for a given period of time, awarded by the United Mexican States to KCS-M. It's not forever; and you can be sure Uncle Warren is quite aware of that.

I think the answer will be to do what CN and UP announced --- a non-merger where you work closely with a partner and don't have to go thru the regulatory scrutiny or public hearings a full-on merger requires.

Commercial alliances without merger complications have been very successful in the international travel space. They don't require nearly the same level of regulatory approval.

They're also easy to unwind if they don't work. Mergers, not so much.

eolesen wrote: ↑Tue May 16, 2023 2:39 pmI think the answer will be to do what CN and UP announced --- a non-merger where you work closely with a partner and don't have to go thru the regulatory scrutiny or public hearings a full-on merger requires.

Agreed. The KCS merger was approved years ago. Merging any two of the current Class 1s would be much harder. I believe it would take the financial collapse of a Class 1 for the STB to allow it to be merged.

Business partnerships can work.

What are the chances that BNSF will be given access to the seemingly infinite well spring of Berkshire money to build up a similar non-merger partnership with other Class Is or Class IIs? Could they potentially have an in with one of the east-of-the-Mississippi Class Is to secure access to eastern seaports and transshipment facilities? Is there a Class II that accesses a really big source of exchange traffic with one of BNSF’s primary main lines that they could throw money at?

We should be calling for breakups. These monopolies of RRs have proven bad for the country.

That's not gonna happen.

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Continuing with my immediate thought, I foresee the duopoly extending into the UMS, with both "Uncles" Pete and Warren having access to the industries (autos, appliances) within the State of Nuevo Leon and to the maritime ports of Lazaro Cardenas, Mich, as well as one possibly developing within the State of Baja California that Mr. Olesen earlier noted.

All of the above quite conditional that the UMS gets their security under control.

Gilbert B Norman wrote: ↑Wed May 17, 2023 7:00 am Continuing with my immediate thought, I foresee the duopoly extending into the UMS, with both "Uncles" Pete and Warren having access to the industries (autos, appliances) within the State of Nuevo Leon and to the maritime ports of Lazaro Cardenas, Mich, as well as one possibly developing within the State of Baja California that Mr. Olesen earlier noted.

All of the above quite conditional that the UMS gets their security under control.

Manzanillo is the biggest container port in Mexico, but it doesn't rank in the top 50 worldwide. Manzanillo is served by Ferromex.

Than you, Mr. JayBee, for addressing Manzanillo, Colina and that it belongs to Ferromex, aka Uncle Pete.

What I have no knowledge of is that road's arrangement with the Federal government. Does Ferromex own outright or does it hold a franchise with the FCM much as does KCS-M with the NdeM.

If Mexican commerce is to someday "amount to something", i.e. they get political stability, then I could foresee both roads having access to any traffic source- and that meaning the US "duopoly" ( UP-NS; BNSF-CSX or v.v) and the Canadians all down there.

I could be mistaken, but I think the Mexican government is just as glad to be out of the railroad business.

Gilbert B Norman wrote: ↑Wed May 17, 2023 7:05 pm Than you, Mr. JayBee, for addressing Manzanillo, Colina and that it belongs to Ferromex, aka Uncle Pete.

What I have no knowledge of is that road's arrangement with the Federal government. Does Ferromex own outright or does it hold a franchise with the FCM much as does KCS-M with the NdeM.

If Mexican commerce is to someday "amount to something", i.e. they get political stability, then I could foresee both roads having access to any traffic source- and that meaning the US "duopoly" ( UP-NS; BNSF-CSX or v.v) and the Canadians all down there.

I could be mistaken, but I think the Mexican government is just as glad to be out of the railroad business.

There are three primary franchises in Mexico, Northeast (KCSM), Northwest (Ferromex), and South (Ferrosur)

Grupo Mexico SA owns 74% of Ferromex UP owns 26%, and Grupo Mexico owns 100% of Ferrosur. Side note Grupo Mexico SA owns the Florida East Coast Rwy. in Florida.

Together the three big Franchises jointly and equally own, the Valle de Mexico terminal railroad in the Federal District of Mexico City.

Gilbert by dollar value and considering both imports from and exports to, Canada is number 1, Mexico is number 2, China is number 3. The China trade is very unbalanced with the US importing much more from China than we export to them.

Here is Pat Ottensmeyer's take on why KCS is in Mexico;
https://www.railwayage.com/freight/clas ... portunity/

Thanks for the fact check,, Mr. Jay Be.

OK; whether or not one holds as I do that there will be an East-West "Transcon Duopoly" up here, do you foresee Uncle Warren making a "foray South of the Border"?, do you foresee the CN attempting to gain access with both ratemaking and trackage rights?

And the big question; do you foresee the UMS "getting their act together" to such extent that commerce can move freely from there that the maritime companies will take advantage of the much lower longshore costs at Lazaro Cardenas and Manzullo than LA/LB, and that they can have confidence that high value cargoes can be securely handled to US markets? I could be mistaken, but somehow I think that this "touted" Lazaro Cardenas - Chicago train CPKC operates must have very high security costs (just what measures they employ I don't think they "exactly advertise").

Not to get too political, but insofar as it pertains to BNSF and Mexican "targets", Andrés Manuel López Obrador, herein referred to as AMLO, has any interest in attacking the corruption and or opioid smugglers going on right now. I'm not sure whether he is considered pro-(legitimate)-business. I'm sure the border issues do affect shipments. Honestly, though, if the price is right, and the profit is there, corruption notwithstanding I see the potential for deals. Corruption is sometimes just a part of business after all.

My personal thought is there will be no merger within the US. One political party would go to town on anti trust action. As it is, each of the Big 4 are larger than the Harriman Lines ever were.

CN may need to find a partner.

Mexico would be a takeover target but for the cartels.