# Canadian Pacific buying Kansas City Southern?



## Cal

Anyone hear about this? I sure haven't 









UPDATE 7-Canadian Pacific to buy Kansas City Southern in $25 bln railway bet on trade


Canadian Pacific Railway Ltd agreed on Sunday to acquire Kansas City Southern in a $25 billion cash-and-stock deal to create the first railway spanning the United States, Mexico and Canada, standing to benefit from a pick-up in trade. It would be the largest ever combination of North American...




ca.news.yahoo.com


----------



## Palmetto

I believe the reality is that CP would like to buy; it has not yet bought. There are quite a few hurdles to jump for CP if this is to come to pass. I imagine the big four US railroads will have a lot to say against this with the STB.


----------



## railiner

Palmetto said:


> I believe the reality is that CP would like to buy; it has not yet bought. There are quite a few hurdles to jump for CP if this is to come to pass. I imagine the big four US railroads will have a lot to say against this with the STB.


I don't really see much difference with this, and when the CN bought the Illinois Central....


----------



## jiml

It will be interesting to see if this announcement (which has been rumored before) triggers a bidding war, given the close working relationship KCS has with both Union Pacific and BNSF. I would assume the Mexican government would also have a say...


----------



## Ryan

Sounds like a done deal to me:


> The proposal has been approved by the board of Kansas City Southern, as well as the U.S. Surface Transportation Board, FT reported. The two companies couldn’t be reached for comment, it added.


----------



## jiml

Ryan said:


> Sounds like a done deal to me:


Anti-trust proceedings could still undo it, remembering the attempted CN buyout of BNSF 20 years ago. 

I've also been trying to figure out where the two railways' tracks actually meet, as opposed to trackage rights on a competitor that might object.


----------



## railiner

jiml said:


> Anti-trust proceedings could still undo it, remembering the attempted CN buyout of BNSF 20 years ago.
> 
> I've also been trying to figure out where the two railways' tracks actually meet, as opposed to trackage rights on a competitor that might object.


Kansas City?



https://www.cpr.ca/en/choose-rail-site/Documents/cp-network-map-2020.pdf











KCS Network Map


KCS connects shippers to consumers via our rail network.




www.kcsouthern.com


----------



## jis

I think the potential anti-trust jeopardy on this one is much smaller than the CN-BNSF one, since it does not really remove competition in a huge way in any large area.

The major route of potential interest to Amtrak that is involved in this is the KCS Meridian Raceway which at one time had been proposed as the route of the so called Crescent-Star a section of the Crescent running from Meridian MS to Dallas/Fort Worth TX.


----------



## jiml

railiner said:


> Kansas City?
> 
> 
> 
> https://www.cpr.ca/en/choose-rail-site/Documents/cp-network-map-2020.pdf
> 
> 
> 
> 
> 
> 
> 
> 
> 
> 
> 
> KCS Network Map
> 
> 
> KCS connects shippers to consumers via our rail network.
> 
> 
> 
> 
> www.kcsouthern.com


I didn't look that hard apparently. I had thought that was an agreement with another "partner" and they had nothing owned south of Chicago. Were they originally Soo tracks or a later acquisition?


----------



## jiml

jis said:


> The major route of potential interest to Amtrak that is involved in this is the KCS Meridian Raceway which at one time had been proposed as the route of the so called Crescent-Star a section of the Crescent running from Meridian MS to Dallas/Fort Worth TX.


I recall that reference/suggestion in another thread. Very interesting. Does Amtrak's lack of any KCS participation vs. their relationship with CP make passenger service any more likely? The report card showing CP's performance with current services certainly makes them look like an ideal partner moving forward.


----------



## railiner

jiml said:


> I didn't look that hard apparently. I had thought that was an agreement with another "partner" and they had nothing owned south of Chicago. Were they originally Soo tracks or a later acquisition?


I believe the MILW....


----------



## jiml

Interesting article from 2015:



https://seekingalpha.com/article/3697646-kansas-city-southern-prime-target-for-takeover


----------



## jis

railiner said:


> I believe the MILW....


AFIR MILW -> SOO -> CP as far as how MILW landed up in CP. But my memory could be wrong on this.


----------



## jiml

railiner said:


> I believe the MILW....


Looks like the DM&E, acquired by CP in 2008.









Dakota, Minnesota and Eastern Railroad - Wikipedia







en.wikipedia.org


----------



## jis

jiml said:


> I recall that reference/suggestion in another thread. Very interesting. Does Amtrak's lack of any KCS participation vs. their relationship with CP make passenger service any more likely? The report card showing CP's performance with current services certainly makes them look like an ideal partner moving forward.


It was in the Crescent PIP AFAIR.

Theoretically CP ownership should make it easier to negotiate. Heck Amtrak and RPA should campaign for requiring such access as a condition for allowing the merger if they are upto it. I am shooting off an email to Jim Matthews.


----------



## jiml

This went from being a footnote on some railway pages to headline news in very short order. Although most are behind paywalls, there's coverage on every major Canadian paper, the WSJ and several internet services. Does anyone think BNSF or UP blinked on this one and missed an opportunity?


----------



## jis

I think BNSF or UP would have faced a much much higher anti-trust hurdle (possibly UP even more so than BNSF), possibly even an insurmountable, on this one.


----------



## Cal

It seems official, CP announced it on their Instagram. 

"Today we have entered into a merger agreement with Kansas City Southern that would join two historic railroads to create the first rail network connecting the U.S, Mexico and Canada. More information at the link in our bio."


----------



## jiml

From CNN:


> Despite the large purchase price, the combined company, which would be called Canadian Pacific Kansas City, wouldn't climb the rankings of the largest of the top-tier railroads: It would remain No. 6 in the United States by revenue.
> Still, the companies are predicting a potential antitrust fight. To win approval, they noted in their joint statement that the deal wouldn't remove any independent railroad competition from the market, since the two combining companies serve different geographies.











Railroad megamerger would create the first Mexico-US-Canada freight rail network | CNN Business


Two of North America's largest railroad companies announced a merger Sunday that would connect freight customers to Canada, the United States and Mexico on a single network for the first time in history.




www.cnn.com


----------



## crescent-zephyr

I’m gonna guess this has something to do with the keystone pipeline cancellation.


----------



## jiml

crescent-zephyr said:


> I’m gonna guess this has something to do with the keystone pipeline cancellation.


You wouldn't be wrong. Take a look at this comprehensive article in Railway Age and resource transportation is one of many "business flow" patterns in play. This thing is starting to make more sense the deeper one digs.









Canadian Pacific, Kansas City Southern Will Merge into “The First USMCA Railroad,” CPKC (UPDATED) - Railway Age


Canadian Pacific Railway Ltd. (CP) will acquire Kansas City Southern (KCS) in a cash and stock transaction worth US$29 billion, the two Class I railroads announced early March 21. The combined entity will be named Canadian Pacific Kansas City (CPKC).




www.railwayage.com


----------



## jiml

The new railway will be called CPKC. They should have retained the "S" on the end, so at least they could beat BNSF for longest acronym.

Here's hoping CP ditches the red paint and keeps KCS' classy scheme system-wide. Also hoping they retain this:


----------



## Cal

crescent-zephyr said:


> I’m gonna guess this has something to do with the keystone pipeline cancellation.


What was this?


----------



## NS VIA Fan

Canadian Pacific's 'return' to Mexico! Mexico City was a destination for Canadian Pacific Airlines for a number of years.


----------



## NS VIA Fan

Cal said:


> What was this?



Google Keystone and Trump.....then Keystone and Biden. Lot's of info there!


----------



## Cal

NS VIA Fan said:


> Google Keystone and Trump.....then Keystone and Biden. Lot's of info there!


Thanks, does make sense


----------



## Willbridge

jis said:


> AFIR MILW -> SOO -> CP as far as how MILW landed up in CP. But my memory could be wrong on this.


The KCY access was originally Milwaukee Road. Into the 1950's they had an overnight CHI<>KCY train.


----------



## Just-Thinking-51

Well Kansas City Southern has been trading like it going to be taken over by another railroad for many years. It finally happened...


----------



## NS VIA Fan

Willbridge said:


> The KCY access was originally Milwaukee Road. Into the 1950's they had an overnight CHI<>KCY train.




The Southwest Limited.....


----------



## Agent

jis said:


> AFIR MILW -> SOO -> CP as far as how MILW landed up in CP. But my memory could be wrong on this.



Since the longer version hasn't been stated here yet:

The Milwaukee Road line to Kansas City became part of the Soo Line, which then became Canadian Pacific. Then it became I&M Rail Link. Then it became Iowa, Chicago, & Eastern. Then it became Dakota, Minnesota, & Eastern. Then it became CP again.


----------



## railiner

Agent said:


> Since the longer version hasn't been stated here yet:
> 
> The Milwaukee Road line to Kansas City became part of the Soo Line, which then became Canadian Pacific. Then it became I&M Rail Link. Then it became Iowa, Chicago, & Eastern. Then it became Dakota, Minnesota, & Eastern. Then it became CP again.


Thanks. I had no idea it went thru all of those stages. I wonder what the Soo Line sold it for, and what CP paid to reacquire it? Would be interesting to know...


----------



## jiml

railiner said:


> Thanks. I had no idea it went thru all of those stages. I wonder what the Soo Line sold it for, and what CP paid to reacquire it? Would be interesting to know...


From Wikipedia:
"On September 4, 2007, the Canadian Pacific Railway (CPR) announced it was acquiring the DM&E from its owners, London-based Electra Private Equity, for US$1.48 billion, and future payments of over $1.0 billion contingent on commencement of construction on the Powder River extension and specified volumes of coal shipments from the Powder River basin."

Also in the mix is this rather interesting item from 1996:


4 MAJOR RAILROADS VIE TO BUY CP LINE


----------



## NS VIA Fan

railiner said:


> Thanks. I had no idea it went thru all of those stages. I wonder what the Soo Line sold it for, and what CP paid to reacquire it? Would be interesting to know...



CP operates as SOO Line Corporation in the US.









Soo Line Railroad - Wikipedia







en.wikipedia.org


----------



## NS VIA Fan

It was actually the Soo Line Corp that recently re-acquired the old CP mainline across the State of Maine from the Central Maine & Quebec Railway:

Soo Line Corporation-Control-Central Maine & Quebec Railway, Inc.

So I imagine it will be the Soo Line Corp acquiring KCS.


----------



## jiml

NS VIA Fan said:


> It was actually the Soo Line Corp that recently re-acquired the old CP mainline across the State of Maine from the Central Maine & Quebec Railway:
> 
> Soo Line Corporation-Control-Central Maine & Quebec Railway, Inc.
> 
> So I imagine it will be the Soo Line Corp acquiring KCS.


Although the Soo Line umbrella covers many of CP's US operations, I believe the ex-D&H and the aforementioned DM&E are not included. The only entity that "lumps" them all together is the STB. None of the financially-based reports on the merger that I've seen have mentioned the word "Soo" except as a footnote (e.g. "Canadian Pacific also owns and operates..."). I have to wonder if we're going to see a new separate subsidiary (CPKC) or if control through the connecting DM&E might make the most sense. It will be interesting to see what happens.


----------



## TrackWalker

jiml said:


> The new railway will be called CPKC. They should have retained the "S" on the end, so at least they could beat BNSF for longest acronym.
> 
> Here's hoping CP ditches the red paint and keeps KCS' classy scheme system-wide...



Logo will most likely will be a variation on this...

CPKC
"The New, Improved and now Lemon Scented Keystone Route"


----------



## jiml

TrackWalker said:


> Logo will most likely will be a variation on this...
> 
> CPKC
> "The New, Improved and now Lemon Scented Keystone Route"


And their new corporate slogan "From Tacos To Tundra".


----------



## Barb Stout

With regard to the Keystone pipeline comments, are you saying that this new railroad will be carrying oil because the pipeline was nixed?


----------



## Barb Stout

I first heard it on NPR this morning. Among other things, the report mentioned that it will help with re-shoring of manufacturing. I think they called it "close shoring" presumably because Canada and Mexico are closer to the US than China.


----------



## jiml

Barb Stout said:


> With regard to the Keystone pipeline comments, are you saying that this new railroad will be carrying oil because the pipeline was nixed?


In addressing environmental concerns, the CEO of CP said it would be around "5 percent" of the combined business, but they will serve both the origination and intended destination of the pipeline. If you look at the Railway Age article (link posted above) I believe it was the third or fourth slide in the business plan maps.


----------



## jiml

Redacted


----------



## jiml

Here is the specific excerpt; the rest of the extensive article can be found below:











Canadian Pacific, Kansas City Southern Will Merge into “The First USMCA Railroad,” CPKC (UPDATED) - Railway Age


Canadian Pacific Railway Ltd. (CP) will acquire Kansas City Southern (KCS) in a cash and stock transaction worth US$29 billion, the two Class I railroads announced early March 21. The combined entity will be named Canadian Pacific Kansas City (CPKC).




www.railwayage.com


----------



## jis

CPKC US HQ moving from Minneapolis to Kansas City. Global HQ will be in Calgary, and Mexico will apparently have two - Mexico City and Monterrey.









Canadian Pacific moving US headquarters out of Minneapolis in $25B deal


This comes after the railway acquired Kansas City Southern to create the first U.S.-Mexico-Canadian network.




bringmethenews.com


----------



## Crowbar_k

I imagine that route between Shreveport and Davenport is going to become very busy.


----------



## lyke99

Kind of can't believe they would ditch the Canadian Pacific Railway name and all of the history connected with it in the company's role in the creation of Canada itself for CPKC...


----------



## railiner

Looks like the only class one retaining their original core name is Union Pacific...


----------



## ehbowen

jiml said:


> The new railway will be called CPKC. They should have retained the "S" on the end, so at least they could beat BNSF for longest acronym.



Cue new nickname "Cupcake" in 3...2...1...



> Here's hoping CP ditches the red paint and keeps KCS' classy scheme system-wide. Also hoping they retain this:
> View attachment 21307



Agreed as to that last.


----------



## Palmetto

lyke99 said:


> Kind of can't believe they would ditch the Canadian Pacific Railway name and all of the history connected with it in the company's role in the creation of Canada itself for CPKC...




It's all about money, dontcha know.


----------



## jiml

lyke99 said:


> Kind of can't believe they would ditch the Canadian Pacific Railway name and all of the history connected with it in the company's role in the creation of Canada itself for CPKC...


Especially after all the effort to replace CP Rail and the PAC-Man logo with full Canadian Pacific on most locomotives.


----------



## railiner

Looks like someone will have to add a couple more verses to this great song...


----------



## jiml

railiner said:


> Looks like someone will have to add a couple more verses to this great song...


----------



## Cal

ehbowen said:


> Cue new nickname "Cupcake" in 3...2...1...


LOL


----------



## crescent-zephyr

Barb Stout said:


> With regard to the Keystone pipeline comments, are you saying that this new railroad will be carrying oil because the pipeline was nixed?



Well KCS and CP already carry oil. I’m willing to bet that the pipeline cancellation “fueled” (pun intended) this sale. CP knows they’ll be running lots of oil trains on this route anyway... why not buy out the whole route! 

I personally don’t think we should allow foreign companies to own major infrastructure but nobody asked me.


----------



## jis

Well, since half of us Americans seem to think that Canada is part of the USA ...


----------



## NS VIA Fan

Here's a logo CP can use......"CP Spans The World"

What's Old is New!


----------



## railiner

crescent-zephyr said:


> I personally don’t think we should allow foreign companies to own major infrastructure but nobody asked me.


Here's one point of view on the matter...it is rather enlightening, although a responder disagrees, calling it an uninformed 'protectionist view'...
One of the industries protected from majority foreign ownership, under the 'national security provision', is airline ownership...




__





StackPath






www.industryweek.com


----------



## jiml

railiner said:


> Here's one point of view on the matter...it is rather enlightening, although a responder disagrees, calling it an uninformed 'protectionist view'...
> One of the industries protected from majority foreign ownership, under the 'national security provision', is airline ownership...


I personally think Canada and the US should be functioning more like the European Union, given the long history, undefended border, etc. They've cooperated for years on free exchange of some goods, defense and other issues, but seldom has political leadership in the two countries aligned for long enough to solidify some of these relationships. Protectionist sentiments exist on both sides and prior to the recent US election were even fuelled by our federal government and comparisons with the previous US president were used to slam more conservative opponents across the country. That said, there is a long history and many examples of US ownership of Canadian companies and vice-versa, so that ship has probably sailed in the case of this merger. If it fails it likely won't be due to "foreign" ownership.

Your point about the airlines is a good one too, and also applies in the reverse. American Airlines tried to acquire controlling interest of their failing partner, Canadian Airlines, until the feds stepped in. It was portrayed at the time as being in the "national interest", but opinions were certainly mixed. In the period immediately prior the two companies were basically operating as one, going well beyond the usual "codeshare" model.

Where the two countries need a combined protectionist outlook is when buyers represent a country that is untrustworthy or has a proven record of hostility or aggression. For example, we're still awaiting a final decision to reject Huawei as the vendor of 5G infrastructure, despite pleas from all our allies.








Liberals won’t commit to date for 5G, Huawei review


Ottawa first expected to make a call about Huawei’s participation in Canada’s 5G networks before the 2019 election. Fourteen months later, the Liberals still won’t commit to a date.




www.thestar.com


----------



## jis

railiner said:


> One of the industries protected from majority foreign ownership, under the 'national security provision', is airline ownership...
> 
> 
> 
> 
> __
> 
> 
> 
> 
> 
> StackPath
> 
> 
> 
> 
> 
> 
> www.industryweek.com


I thought the airlines thing is because they are an integral part of the military transport network during any foreign (mis)adventures.


----------



## railiner

jis said:


> I thought the airlines thing is because they are an integral part of the military transport network during any foreign (mis)adventures.


It is...hence the 'national security provision'


----------



## Willbridge

We have a long shared history in rail and steamship operations in all of the Americas. The exceptions, such as Mexican nationalization or the end of through tariffs with the advent of Amtrak and VIA Rail haven't benefited consumers/shippers.

In the Vietnam war there were Canadians who wanted the government to stop U.S. shipments of military vehicles across Canadian borders. The government refused to do that because in World War 1 Canada had run troop trains across neutral U.S. borders.


----------



## jiml

Another trivia footnote if/when the acquisition completes is that CP will inherit 50% of the Panama Canal Railway, who operate some interesting passenger stock and are one of very few railways to operate F40's in freight service - a mix of ex-Amtrak and GO Transit units.


----------



## jis

jiml said:


> Another trivia footnote if/when the acquisition completes is that CP will inherit 50% of the Panama Canal Railway, who operate some interesting passenger stock and are one of very few railways to operate F40's in freight service - a mix of ex-Amtrak and GO Transit units.


Been there and done that. Interesting trip in the Dome. I guess the only railway that runs a through Atlantic to Pacific service, or well, the other way round if one starts from Panama City.


----------



## railiner

jis said:


> Been there and done that. Interesting trip in the Dome. I guess the only railway that runs a through Atlantic to Pacific service, or well, the other way round if one starts from Panama City.


Just read your post, and curiosity led me to the Trip Advisor site on this railway...some great interior shots of the former SP home built dome lounge used...









Historic Portobelo and Panama Canal Sightseeing Tour with Scenic Train Ride







www.tripadvisor.com


----------



## jis

railiner said:


> Just read your post, and curiosity led me to the Trip Advisor site on this railway...some great interior shots of the former SP home built dome lounge used...
> 
> 
> 
> 
> 
> 
> 
> 
> 
> Historic Portobelo and Panama Canal Sightseeing Tour with Scenic Train Ride
> 
> 
> 
> 
> 
> 
> 
> www.tripadvisor.com


Yup. That looks very familiar.


----------



## NS VIA Fan

railiner said:


> Just read your post, and curiosity led me to the Trip Advisor site on this railway...some great interior shots of the former SP home built dome lounge used...



All in the Family.....

CP recently rebuilt a former SP home-built Dome for the Business Car fleet...









Canadian Pacific dome car 'Selkirk' joins passenger car fleet | Trains Magazine


Trains magazine offers railroad news, railroad industry insight, commentary on today's freight railroads, passenger service (Amtrak), locomotive technology, railroad preservation and history, railfan opportunities (tourist railroads, fan trips), and great railroad photography.




www.trains.com


----------



## jiml

It makes you wonder what's going to happen with KCS' rather nice-looking business train.


----------



## railiner

NS VIA Fan said:


> All in the Family.....
> 
> CP recently rebuilt a former SP home-built Dome for the Business Car fleet...
> 
> 
> 
> 
> 
> 
> 
> 
> 
> Canadian Pacific dome car 'Selkirk' joins passenger car fleet | Trains Magazine
> 
> 
> Trains magazine offers railroad news, railroad industry insight, commentary on today's freight railroads, passenger service (Amtrak), locomotive technology, railroad preservation and history, railfan opportunities (tourist railroads, fan trips), and great railroad photography.
> 
> 
> 
> 
> www.trains.com


Nice article, thanks for posting. I'm sure the rebuild has resulted in a very nice ultra-plush lounge car, but as I have noted in several previous posts, I am not a fan of that unique layout, among other full length (or "3/4" length) dome cars. While the "cathedral ceiling" is a nice feature, I don't like the fact that everyone passing thru the car must climb up into and thru the dome, and then back down at the other end. There is no lower level pass-thru, like the other's have.
But the worst thing about those cars, is the "rifle-slot" front and rear windows with their high bulkheads, that are almost impossible to see anything but the sky through. Give me a Budd, ACF, Pullman, or St. Louis Car, short dome, any day, over that one...


----------



## jiml

Breaking news:



CN steps up with $33B offer for Kansas City Southern, besting CP's $25B bid


----------



## Rasputin

jiml said:


> Breaking news:
> 
> 
> 
> CN steps up with $33B offer for Kansas City Southern, besting CP's $25B bid


Perhaps we will see a "City of Mexico City and New Orleans."


----------



## jis

Rasputin said:


> Perhaps we will see a "City of Mexico City and New Orleans."


If CN gets it then the train will consist of four passenger cars and 18 baggage cars to meet the enhanced axle count requirements for the longer distance of worse maintained track and signal infrastructure


----------



## jiml

I had thought a US Class 1 would have made a counter-proposal (looking at you BNSF) and still wouldn't rule that out. That said, my understanding was that CP and KCS actually have a deal in place pending approvals. This could simply be a fishing expedition.


----------



## NSC1109

jiml said:


> I had thought a US Class 1 would have made a counter-proposal (looking at you BNSF) and still wouldn't rule that out. That said, my understanding was that CP and KCS actually have a deal in place pending approvals. This could simply be a fishing expedition.



KCS/CP deal doesn’t mean anything. The KCS board has a fiduciary duty to pursue the best deal for the shareholders, and if that ends up being CN instead of CP then it’ll be CN/KCS.


----------



## WWW

A little background to this Monopoly version of Adult Toy Railroads:






*Century-Old Rail Rivalry Flares Up, Now Over a $30 Billion Prize*
Kevin Orland 2 hrs ago
Century-Old Rail Rivalry Flares Up Over a $30 Billion Prize
https://twitter.com/share?url=http://a.msn.com/00/en-us/BB1fRCY2?ocid=st&text=Century-Old+Rail+Rivalry+Flares+Up,+Now+Over+a+$30+Billion+Prize&original_referer=http://a.msn.com/00/en-us/BB1fRCY2?ocid=st
https://web.whatsapp.com/send?text=http://a.msn.com/00/en-us/BB1fRCY2?ocid=sw

CP - Stock quote for CANADIAN PACIFIC RAILWAY LIMITED - MSN Money




> (Bloomberg) -- Canadian National Railway Co.’s bid to wrest Kansas City Southern away from Canadian Pacific Railway Ltd. is rekindling a century-old rivalry and pitting former colleagues against each other.
> 
> The $30 billion takeover fight sees Canadian National Chief Executive Officer Jean-Jacques Ruest attempting to grab a prize long sought by Canadian Pacific CEO Keith Creel, who once served alongside him as Canadian National’s chief operating officer. It’s one of the biggest railway deals of the past two decades, with the winner gaining control of a sprawling network that crosses the three countries in North America’s trade alliance.



Century-Old Rail Rivalry Flares Up, Now Over a $30 Billion Prize (msn.com)

MODERATOR NOTE: edited because of copyright rules


----------



## Just-Thinking-51

Dang where the popcorn?


----------



## jiml

Just-Thinking-51 said:


> Dang where the popcorn?


I hear you! This is going to get interesting, although I still think a US Class 1 is going to ride in on a white horse and claim the prize.


----------



## WWW

I don 't think I will see this one offered on eBay or a TV edition of "Let's make a Deal" !

Ok will start the bidding at 25 B -
Do I have any bids for 25 B ?
The man with CP logo just entered 25 B
Oh oh - enter the man with CN logo
Bid now at 33 B

Ok we are talking about a spot on the Adult railroads monopoly board
and we haven't been around the board to collect the 200 whatever prize money
for passing go - this is going to get interesting - - - - -

How big is too big to fail or succeed ?


----------



## jiml

I read today that KCS is "worth" around $30B USD. That would make CP's bid a bargain and CN's bid over-market.


----------



## railiner

It's like the NS - CSX fight over Conrail, all over again....

I would think that the government would rather CP get it, because CN already has the somewhat parallel IC....


----------



## jiml

Other than the usual suspects, I wonder if NS would be an interested party?


----------



## Bob Dylan

jiml said:


> I hear you! This is going to get interesting, although I still think a US Class 1 is going to ride in on a white horse and claim the prize.


BNSF is the obvious one, I don't think the other Class Is would have the Money, or the need for it.


----------



## jiml

Bob Dylan said:


> BNSF is the obvious one, I don't think the other Class Is would have the Money, or the need for it.


That was my thought all along, since they work closely together in many operations, however I think there would be regulatory hurdles. Same for UP. I don't see CSX in the picture, but NS might be an interesting fit with their connection in Mississippi. You're right that they might not have the cash, having been a takeover target in the past. As @railiner pointed out, this is starting to sound very familiar and there's only one direction the price is going.


----------



## Crowbar_k

Personally, having one of the two Canadian railroads buy KCS would be better for shipping because then they would operate in all three major North American countries.


----------



## jiml

Canadian National has filed a notice of intent with the STB regarding the acquisition. Surprisingly, CP had yet to do so and hastily submitted theirs today as well. CN appears ready to move this along much quicker than initially proposed by CP/KCS.


----------



## jiml

In another development, credit rating service DBRS issued a warning against Canadian National, stating that the debt of the combined companies would be too high.


> The combined entity's debt-to-EBITDA ratio will be just above 4.5 times while cash flow-to-debt will decline below 20%, levels that are no longer commensurate with the current ratings.


CN's credit rating would be adversely affected, making their cost of borrowing higher. No similar concerns were expressed on the CP offer, suggesting they may have more cash at their disposal.


----------



## jiml

CN - Transportation Services - Rail Shipping, Intermodal, trucking, warehousing and international transportation


Shipping by Rail and Intermodal is efficient, reliable, cost effective & environmentally friendly. CN is your complete transportation and logistics solution.




www.connectedcontinent.com


----------



## jiml

UP is expected to step into this, according to their CEO quoted in Railway Age and other news sources.


----------



## jis

Maybe like Conrail, CS will get divvied up among multiple suitors?


----------



## jiml

Kansas City Southern says it will talk with rival bidder CN; CP welcomes regulatory ruling


----------



## jiml

jis said:


> Maybe like Conrail, CS will get divvied up among multiple suitors?


I've wondered how that might be done. The prize in all this is the line out of Meridian, MS. There's only one line into Mexico - not sure how it could be divided.


----------



## jis

jiml said:


> I've wondered how that might be done. The prize in all this is the line out of Meridian, MS. There's only one line into Mexico - not sure how it could be divided.


The other possibility is joint operations ownership of critical parts, like the Tehachapi or the Denver - Pueblo join line.


----------



## jiml

jis said:


> The other possibility is joint operations ownership of critical parts, like the Tehachapi or the Denver - Pueblo join line.


Whoever said "get the popcorn" got it right on this one.


----------



## jiml

US STB gives thumbs-up to CP, but KCS board prefers more money from CN.









U.S. regulator says merger waiver applies to CP but KSC board says CN offer 'superior'


The competing bids for U.S. railway Kansas City Southern each received a boost with the U.S. regulator saying a 2001 merger waiver applies to Canadian Pacific Railway, while KCS's board says CN Rail's proposal could lead to a superior proposal.



calgary.ctvnews.ca


----------



## railiner

jis said:


> The other possibility is joint operations ownership of critical parts, like the Tehachapi or the Denver - Pueblo join line.


Or...”Conrail Shared Assets”?


----------



## neroden

The STB isn't going to approve any of these offers outright due to anticompetitive effects. It'll be interesting to see what happens in the end, but a carve-up or divestiture is highly likely.


----------



## jiml

neroden said:


> The STB isn't going to approve any of these offers outright due to anticompetitive effects. It'll be interesting to see what happens in the end, but a carve-up or divestiture is highly likely.


There's a good chance of the CP one going through without a hitch, barring a complaint from another Class 1. The STB has already rendered a preliminary opinion and it looked favorable. OTOH you're right about CN, UP, etc. I believe without looking back it was @railiner who suggested CN might have to divest themselves of one of their north-south lines, which makes sense. The next steps are all about whether the stockholders are more concerned about making more money at the expense of quick resolution.


----------



## jis

jiml said:


> There's a good chance of the CP one going through without a hitch, barring a complaint from another Class 1. The STB has already rendered a preliminary opinion and it looked favorable. OTOH you're right about CN, UP, etc. I believe without looking back it was @railiner who suggested CN might have to divest themselves of one of their north-south lines, which makes sense. The next steps are all about whether the stockholders are more concerned about making more money at the expense of quick resolution.


Or no money at all if everyone gets tired of it and the deal falls through.


----------



## jiml

Slightly off-topic, but nice shot of KCS business train at 2:07.


----------



## Bob Dylan

jiml said:


> Slightly off-topic, but nice shot of KCS business train at 2:07.



Boy, that's a Long Business Train! Looks like the Canadian in the Summer!


----------



## jiml

CP to STB: CN + KCS ‘Plainly Flunks End-to-End Test’ - Railway Age


Canadian Pacific on April 30 filed a formal objection with the Surface Transportation Board stating that CN “does not qualify for a waiver of the STB’s rules for major transactions, with respect to CN’s unsolicited proposal for Kansas City Southern.”




www.railwayage.com


----------



## jiml

CP may not be done yet:





__





Canadian Pacific comments on update from Kansas City Southern







www.cpr.ca


----------



## Just-Thinking-51

In my opinion CP would be a better fit, but money talks.


----------



## jiml

Just-Thinking-51 said:


> In my opinion CP would be a better fit, but money talks.


Right on both counts.


----------



## Just-Thinking-51

Wild thought, but with CN already own a line to the gulf would a there not be a easy solution that both CN and CP can have a route to Houston. With the Mexican route being spun off as a independent line from Mexico that interchange with any and all in Houston. Not sure the value to the shareholders would be, the plus side for everyone else is high.


----------



## neroden

DOJ to STB: Prohibit CN Voting Trust (UPDATED) - Railway Age


In a May 14 filing with the Surface Transportation Board, the United States Department of Justice has said CN’s application for a voting trust to acquire Kansas City Southern should be denied, because the proposed merger “raises sufficient competition concerns.”




www.railwayage.com





CN's initial offer is no good. STB is going to follow DOJ advice here.

Time for the next round of offers. My bet: the final result is no merger at all.


----------



## railiner

neroden said:


> DOJ to STB: Prohibit CN Voting Trust (UPDATED) - Railway Age
> 
> 
> In a May 14 filing with the Surface Transportation Board, the United States Department of Justice has said CN’s application for a voting trust to acquire Kansas City Southern should be denied, because the proposed merger “raises sufficient competition concerns.”
> 
> 
> 
> 
> www.railwayage.com
> 
> 
> 
> 
> 
> CN's initial offer is no good. STB is going to follow DOJ advice here.Your
> 
> Time for the next round of offers. My bet: the final result is no merger at all.


You're probably correct, but a "Conrail" sort of solution (splitting it between them), is within the realm of possibilities. As a Conrail stockholder, I was very much opposed to that, but not for financial reasons, as most CR stockholder's were for it...


----------



## jiml

These are two bratty kids who don't get along in their home sandbox. 

I see it going one of two ways. Either CP will raise their offer (doesn't have to be quite as high as CN's) and use their existing approval to proceed or one of the two will partner with a US Class 1 to share. Now it's just a matter of going through the list to see who plays nice with whom.


----------



## jiml

CP Rail stands by bid for KCS as U.S. Justice Department opposes CN voting trust


Canadian Pacific Railway Ltd. remains confident that its proposal to acquire Kansas City Southern will succeed without the need to increase its bid after the U.S. Justice Department came out against Canadian National Railway Co.'s use of a voting trust in its rival offer that the U.S. railway...




ca.finance.yahoo.com


----------



## MisterUptempo

KCS kicks CP out of love nest...

*Merger update: KCS terminates CP deal; CP to seek STB authority for control of KCS *



> Kansas City Southern today announced that its board has unanimously determined that the acquisition proposal it received from CN on May 13 continues to constitute a “company superior proposal” under KCS’s pending merger agreement with Canadian Pacific.
> 
> As a result, KCS terminated the CP merger agreement and entered into a merger agreement with CN, KCS officials said in a press release.
> 
> ---SNIP---
> 
> In connection with the termination of the CP merger agreement, KCS paid CP a breakup fee of $700 million, which will be reimbursed by CN. KCS will be obligated to refund this amount under certain limited circumstances, including if KCS terminates the CN merger agreement to accept a superior proposal.
> 
> In response to the KCS board’s decision to terminate the merger agreement, CP officials today said they’ve sent a letter to the STB indicating the company will pursue board review of an application to control KCS.
> 
> CP’s letter outlines why it believes that pursuing its STB application is in the best interests of KCS and the public so that the “pro-competitive” CP+KCS combination can proceed to be reviewed, CP officials said in a press release.
> 
> “CP intends to proceed to prepare and file its application in this docket seeking [STB] authority to control KCS and its U.S. rail carrier subsidiaries,” the letter states.



More at Progressive Railroading.


----------



## jiml

Canadian Pacific plans to make new, higher bid for Kansas City Southern - WSJ


----------



## Bob Dylan

jiml said:


> Canadian Pacific plans to make new, higher bid for Kansas City Southern - WSJ


And the meter runs as the Lawyers circle!


----------



## MisterUptempo

KCS board backs CN merger proposal, cites possible shareholder meeting change



> It didn’t take long for Kansas City Southern’s board to consider Canadian Pacific’s sweetened merger offer.
> 
> Just two days after CP presented the higher bid, KCS’ board determined it doesn’t constitute a “superior proposal” to CN’s competing bid and could not reasonably be expected to lead to a superior proposal. The board came to that conclusion following a “careful and thorough review” in consultation with outside financial and legal advisors, KCS officials said in a press release.
> 
> “The KCS board reaffirms its recommendation to KCS shareholders to vote in favor of the pro-competitive, end-to-end merger with CN, which will create the premier railway for the 21st century and offer unparalleled opportunities and benefits for customers, employees, shareholders, the environment and the North American economy,” they said. “The board recommends shareholders vote for the pending merger with CN.”



------snip----



> However, the special stockholders meeting KCS has scheduled for Aug. 19 to vote on the merger proposals will be postponed if the Surface Transportation Board (STB) does not issue a ruling on the CN-KCS voting trust by the end of business on Aug. 17. The STB recently announced it expects to issue a ruling by Aug. 31.
> 
> The postponement would provide shareholders and the board more time to receive and consider the STB decision, KCS officials said. If the meeting is adjourned, a new date will be announced soon, they added.


----------



## neroden

I would be very, very, *very* surprised if the STB approved the voting trust. It's a shenanigan to attempt to gain control before getting approval, and the STB is pretty sour about the behavior of all the freight railroad CEOs at this point.


----------



## MisterUptempo

*Kansas City Southern to begin talks with Canadian Pacific*
Source - Progressive Railroading



> Kansas City Southern today announced that its board has unanimously determined that the unsolicited proposal received from Canadian Pacific on Aug. 31 to acquire KCS in a cash and stock transaction valued by CP at $300 per KCS share could reasonably be expected to lead to a “company superior proposal” as defined in KCS’s merger agreement with CN.
> 
> KCS intends to provide CP with nonpublic information and to engage in discussions and negotiations with CP with respect to CP’s proposal, subject in each case to the requirements of the CN merger agreement, KCS officials said in a press release.
> 
> KCS remains bound by the terms of the CN merger agreement, and KCS's board has not determined that CP's proposal in fact constitutes a company superior proposal. In addition, KCS notes that there can be no assurance that the discussions with CP will result in a transaction, the press release stated.
> 
> As previously announced on May 21, KCS entered into a merger agreement with CN, pursuant to which CN agreed to acquire KCS in a stock and cash transaction valued at $325 per KCS share based on the CN and KCS closing prices on May 12.


----------



## Willbridge

MisterUptempo said:


> *Kansas City Southern to begin talks with Canadian Pacific*
> Source - Progressive Railroading


A return to sanity? A logical relationship instead of a way to reduce service. Now to get a time machine and merge the D&RGW and WP into the BNSF.


----------



## jiml

Willbridge said:


> A return to sanity? A logical relationship instead of a way to reduce service.


It made sense from the beginning, then the KCS board's eyes lit up with the CN offer. I'm sure CP would like to use a "take it or leave it" approach as the last bidder standing, but bettering the CN offer may act as a "poison pill" that requires them to pay too much.


----------



## jis

What I hear is that CN is about to face a hostile takeover by a branch of its Board led by a hedge fund. I think they have suddenly become quite busy with internal squabbles with the management now more focused on saving their own rear ends and jobs.


----------



## jiml

jis said:


> What I hear is that CN is about to face a hostile takeover by a branch of its Board led by a hedge fund. I think they have suddenly become quite busy with internal squabbles with the management now more focused on saving their own rear ends and jobs.


One article suggested this response to what some board members considered an "irresponsible" overstep in the bid that had more to do with the egos of leadership rather than fiscal responsibility. CP is another story... they had the cash for their original bid. Whether that's still true with an increased expenditure remains to be seen.


----------



## jiml

More information:








Canadian National Railway investor TCI says it’s marshalling support among shareholders to unseat top executives


Activist investor TCI Fund Management said CN’s lagging financial performance and its unsuccessful pursuit of KCS so far signal Canada’s largest railway needs new management




www.theglobeandmail.com





It would not be a surprise for the (Canadian) federal government to stick their noses into this.


----------



## jiml

CN is out; KCS accepts CP bid:





__





'It's been a battle': CP Rail on track to create first North American railway network in hard-fought deal






www.msn.com


----------



## jiml

__





Canadian Pacific closes US$31-billion Kansas City Southern acquisition deal






www.msn.com


----------

