Canadian Pacific CEO says CSX ‘in play’

[thelakelander]

As he discussed Norfolk Southern, Harrison recalled his talks with CSX officials in October 2014.

"We got a signal from the board in Jacksonville that maybe we should visit and talk and so we did," Harrison said, according to a transcript of the conference call posted by Canadian Pacific.

Harrison said he met with CSX for about two hours and found that CSX officials believed a merger would never get regulatory approval.

CSX Chief Executive Michael Ward wouldn't comment about Canadian Pacific last year when word of the talks leaked out, but he did express his view that regulatory hurdles would likely make any big railroad merger difficult.

"Now contrary to that today, as I understand it and you can ask them better than me, they've effectively put themselves in play and for the right price, they would contemplate a deal," Harrison said last week.

Full article: http://www.jaxdailyrecord.com/showstory.php?Story_id=546710

[spuwho]

LOL. So they would merge if the "regulatory" hurdles weren't so insurmountable?

Talk about corporate speak before this was released.

Both CSX and NS were saying it wasnt a good fit upfront until the parachute got better. Now its "regulatory" issues.

Now its not really a "fit" problem afterall. Its a government problem.

My take is that even though they don't overlap, any STB agreement would include some spinoffs and trackage tights to BNSF, UP and probably KCS.

[I-10east]

Sigh, here we go again...CP is like that woman in 'Fatal Attraction'.

[spuwho]

Well, you can tell UP is real excited about any merger. (not)

The line about "making Chicago worse" is laughable (Chicago is already a mess).

Per Trains:

http://trn.trains.com/news/news-wire/2015/12/18-up-merger-fears


OMAHA, Neb. — Union Pacific fears the consequences of any merger, not just a shotgun marriage of Canadian Pacific and Norfolk Southern, could lead to increased regulation and more, not less, congestion in Chicago.

In a statement to investors posted Thursday, UP also hints at its response as the merger scene evolves saying it will act in the best interests of the railroad, customers and shareholders. Whether that would involve seeking its own eastern merger partner is not made clear.

The explicit concerns, however, focus on conditions federal regulators might attach as the number of Class 1 railroads shrinks and the effect on current interchange partners trying to untangle Chicago.

"The Surface Transportation Board (STB) has made it clear that future combinations would need to enhance competition — not just maintain it — and improve operations for customers," UP says in the statement. "The STB must also analyze the broader effects of a merger, including whether it would trigger additional consolidation in the industry.

"Many complicated implications could result from industry consolidation."

One of those complications, in UP's view, could be the STB imposing "open access" allowing one railroad to use another's tracks to move and switch freight.

"This would restrict capital investment, affect railroad jobs and allow government regulators to set rail rates and service conditions, all of which have negative consequences on the U.S. economy and UP's customers," UP adds.

UP also suggests any merger of eastern and western lines could result in the new line giving preference to its traffic through Chicago making congestion worse. The competing railroads currently are working together to improve interchange in the national rail hub although UP notes CP chose not to participate in a joint operations center there.

In mid-November CP made an unsolicited $28 billion offer for NS in cash-and-stock deal NS management rejected along with a second, sweetened bid. NS is now considering a third offer valued at nearly $33 billion.

CP CEO Hunter Harrison, in an interview with Bloomberg Business earlier this week, says a proxy fight bypassing NS management and taking the proposal directly to NS shareholders may be the next move.

Meanwhile BNSF Railway Executive Chairman Matt Rose tells the Wall Street Journal a merger of CP and NS would kick off a final round of mergers involving all the large carriers.

[I-10east]

Glory hallelujah, about time that they stopped pursuing!!! Canadian Pacific ends bid for CSX. Some may say because CSX stocks are expected to take a hit in the future, although seems railroad across the board will take a hit.

http://www.bizjournals.com/jacksonville/news/2016/04/11/canadian-pacific-ends-bid-for-csx-rival.html

http://www.bizjournals.com/jacksonville/news/2016/04/12/major-declines-in-csxs-first-quarter-set-stage-for.html

[spuwho]

Glory hallelujah, about time that they stopped pursuing!!! Canadian Pacific ends bid for CSX. Some may say because CSX stocks are expected to take a hit in the future, although seems railroad across the board will take a hit.

http://www.bizjournals.com/jacksonville/news/2016/04/11/canadian-pacific-ends-bid-for-csx-rival.html

http://www.bizjournals.com/jacksonville/news/2016/04/12/major-declines-in-csxs-first-quarter-set-stage-for.html

I think you read it wrong.

CP is stopping their bid for NS, which is CSX's rival for east coast rail.

CP gave up on CSX last year.

CP found out that they werent going to get enough votes at the NS shareholders meeting to put CP in trust while Harrison ran NS.

I think this puts CP into another strategy for integration. If they really want biz out of the southeast, they shouldnt have dumped their Louisville gateway rights they acquired from the Milwaukee Road.

With some of the CSX decisions as well, sometimes the economics of rail seem non-sensical.

[I-10east]

^^^Thanks for correcting.