Canadian Railroads > More on CP - CSX

I can see why EHH would be pushing this, he has cut, cut, cut and cut again at CP, which has done wonders for the stock price, but pushed the railroad to a point where it might collapse on itself, so before his house of cards comes crashing down, dump the mess he has made onto someone else, take the money and run home to play with his horsies.

The following was found in Minn Grain & Feed Assn newsletter.

Canadian Pacific, CSX Merger Plan Remains Alive

Canadian Pacific Railway Ltd. ’s proposed merger with CSX Corp. is being pushed by perhaps the only railroad boss in favor of consolidation.

And while CSX didn't’t accept CP Chief Executive Hunter Harrison ’s approach last week, that is unlikely to be the last word.

People familiar with the talks between CP and CSX, reported Sunday by The Wall Street Journal, said discussions are still possible between the two.

“This conversation has been going on in every board room in the rail business,” one of the people said. “Everybody has been running numbers. We’re dealing with a rail network that’s not boundless in its infrastructure. You can take an existing infrastructure and make it work better.”

While Mr. Harrison favors railroad consolidation, many competitors, shippers and analysts worry that mergers could aggravate congestion delays and raise costs. Some shippers blame previous mergers for continued traffic problems, which have been exacerbated by growing amounts of crude oil being shipped by rail.

“I think it’s a common belief that now would not be a good time,” said a top executive at a major railroad, “because of the regulatory change that would accompany it and the upheaval it would cause the industry.”

Mr. Harrison—who also has run CP’s bigger rival, Canadian National Railway Co. —believes consolidation would help untangle and streamline the rail infrastructure. Were CP and CSX to combine, that would, for example, allow a single railroad to deliver coal from mine to utility, reducing handoffs and inefficiency.

Chicago is likely central to Mr. Harrison, who was brought in by activist investor William Ackman to run CP after a 2012 proxy fight. By combining the CSX and CP rail networks, trains would be able to move around the congested Midwestern gateway without the need to hand trains over to another carrier. That takes anywhere between 15 to 42 hours, according to recent data from the Association of American Railroads.

“Look, we’ve got to wake up,” Mr. Harrison said in a May interview. “Here’s all this traffic going through Chicago, and all the rails run down right through the center of Chicago.”

Last year’s record cold and bumper crop of grain led to bottlenecks and delays that took months to clear. Some people are worried that such problems will be repeated this winter and could get worse with consolidation.

“We need more competition, not less,” said Paul Gutierrez, secretary for Consumers United for Rail Equity, an industry group representing companies that rely on trains to ship goods and supplies. “With four railroads controlling 90% of the traffic, this would just create more of a monopoly.…We don’t think that’s a good thing.”

In the event of a merger, “management teams would be more focused on integrating operations than fixing the service,” said Mark Levin of BB&T Capital Markets. “With service pretty poor across the industry, the timing of the [possible] merger is interesting.”

Consolidation would increase anxiety for miners, whose shipments to power plants have been delayed behind tank cars carrying oil and gas.

CSX acknowledged that coal customers suffered during the last, particularly harsh, winter. Miners worry about more of the same if this winter is no milder and coal demand rises sharply.

Railroad capacity “isn’t able to swing that much” to meet demand, Greg Boyce, the CEO of miner Peabody Energy Corp. said recently.

CSX has said it is coping with increased demand by adding equipment and workers to improve performance. But carrying a mix of energy products, including natural gas, allows CSX to “capitalize on growth opportunities,” CEO Michael Ward wrote to federal regulators last month.

Source: The Wall Street Journal —David George-Cosh and Jacob Bunge contributed to this article.

mns019 Wrote:
-------------------------------------------------------
> I can see why EHH would be pushing this, he has
> cut, cut, cut and cut again at CP, which has done
> wonders for the stock price, but pushed the
> railroad to a point where it might collapse on
> itself, so before his house of cards comes
> crashing down, dump the mess he has made onto
> someone else, take the money and run home to play
> with his horsies.

If that is true why is he pouring money into new CWR, Ties, and Ballast for CP's North Line. And what about the money for CTC on the Moose Jaw, SK to Glenwood, MN line?

Another reason why EHH may be pushing this is because the Obama Administration's version of a Justice Department and a Surface Transportation Board pretty much rubber stamps every merger proposal that crosses their desks. Can you name ONE merger that hasn't been given a green light since Obama has been in office, out of concern for anti-competitive, monopolistic or other reasons? I can't.

You have to make hay while the sun shines.

Although, in this day and age, this policy will probably be in effect no matter who is occupying the White House.

Pretty soon there will be one railroad, one airline, one bank, one auto manufacturing company, one oil company . . .

CA_Sou_MA_Agent Wrote:
-------------------------------------------------------
> Another reason why EHH may be pushing this is
> because the Obama Administration's version of a
> Justice Department and a Surface Transportation
> Board pretty much rubber stamps every merger
> proposal that crosses their desks. Can you name
> ONE merger that hasn't been given a green light
> since Obama has been in office, out of concern for
> anti-competitive, monopolistic or other reasons?
> I can't.

Uh, T-Mobile/Sprint:

http://www.reuters.com/article/2014/08/06/us-sprint-corp-tmobile-wheeler-idUSKBN0G61GS20140806

ts1457 Wrote:
-------------------------------------------------------
> Uh, T-Mobile/Sprint:
>
> http://www.reuters.com/article/2014/08/06/us-sprin
> t-corp-tmobile-wheeler-idUSKBN0G61GS20140806

Did a Governmental agency issue a ruling that they could not merge or did the two companies decide on their own to pursue other ventures?

What has their track record been in the transportation arena? For a few days they gave some thought to denying the American Airlines - US Airways merger, but then everyone joined hands and sang "Kum By Yah" after the two carriers agreed to give up some gates at certain airports.



Edited 1 time(s). Last edit at 10/16/14 04:17 by CA_Sou_MA_Agent.

CA_Sou_MA_Agent Wrote:
-------------------------------------------------------
> Another reason why EHH may be pushing this is
> because the Obama Administration's version of a
> Justice Department and a Surface Transportation
> Board pretty much rubber stamps every merger
> proposal that crosses their desks.

Canada has a Federal Election planned for next year, and a change in political parties which govern the Nation is possible and likely.

While both of the two main political parties are business friendly, the present Conservative Government of Stephen Harper is renown for making decisions with limited Parliamentary debate.

CA_Sou_MA_Agent Wrote:
-------------------------------------------------------
>
> Pretty soon there will be one railroad, one
> airline, one bank, one auto manufacturing company,
> one oil company . . .

________________________

Nah, all four of those companies will be owned by Google.

march_hare Wrote:
-------------------------------------------------------
> CA_Sou_MA_Agent Wrote:
> --------------------------------------------------
> -----
> >
> > Pretty soon there will be one railroad, one
> > airline, one bank, one auto manufacturing
> company,
> > one oil company . . .
>
> ________________________
>
> Nah, all four of those companies will be owned by
> Google.

More likely Wal-Mart and HQ moved to Peking or DuBai!

Larry Dodgion
Wilsonville, OR

Look, it's going to happen, only a matter of who merges with whom and when. I say get the damn thing over with--and let's move on.

Dr. Loco just might be able to make a temporary transfer to the great white north on occasion.... :-)

NYC6001 Wrote:
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> Dr. Loco just might be able to make a temporary
> transfer to the great white north on occasion....
> :-)


Hey-Don't give away all my secrets!

Hunter knows that his "deferred maintenance" is going to bite him in the ass soon,so he's hoping to dump the company on another road that will make his fudged in operating ratio look good. Plus Ackman's got his two years in and he's looking to get out.

Dean Purcell
Bracebridge, ON



Edited 2 time(s). Last edit at 10/18/14 16:42 by 9643_South.