Canadian Pacific buying Kansas City Southern?

[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]

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]

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]

https://www.connectedcontinent.com/?gclid=EAIaIQobChMI39yeoM6Q8AIVARQ_Ch0d1A9bEAEYASAAEgJthfD_BwE

 

[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]

https://www.msn.com/en-ca/money/top...r-BB1g0CpF?ocid=MF11KM&li=AAggNb9&OCID=MF11KM

 

[jiml]

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]

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]

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.

https://calgary.ctvnews.ca/u-s-regu...ut-ksc-board-says-cn-offer-superior-1.5402693

 

[railiner]

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]

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]

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]

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]

https://www.railwayage.com/regulatory/cp-to-stb-cn-kcs-plainly-flunks-end-to-end-test/

 

[jiml]

CP may not be done yet:

https://www.cpr.ca/en/media/canadian-pacific-comments-on-update-from-kansas-city-southern