Monday evening of this week, I was waiting for Antiques Road Show to begin. In the minutes beforehand, there was a brief news headlines segment, wherein the broadcast person announced that CP was interested in acquiring Norfolk Southern. I have not seen nor heard mention of this since then. I am wondering if it is real, or did those PBS folks get sucked into the railfan rumor mill?
http://www.timesunion.com/business/article/Reports-Canadian-Pacific-Railway-seeks-to-6623071.php http://www.nytimes.com/2015/11/10/b...-to-weigh-deal-for-norfolk-southern.html?_r=0 http://www.businessinsider.com/canadian-pacific-norfolk-southern-deal-2015-11
I have a difficult time understanding how such a merger could get through. For any one company to control so much of an industry.... The word is monopoly.
Fred Frailey posted a discussion of this on his blog hosted by Trains magazine. I believe you have to be a subscriber to Trains for access, but here's the link in case Fred's blog is open to the public.
Hank- As a non-suscriber, was able to access and read the article. I am wondering exactly why CP is really interested. There must be some easy money pickings hidden in there someplace. "End to end" or not, these things usually end up with something being stripped, track miles and jobs going away.
I recall the epic headlines and endless regulatory events that took place during the battle for control of Conrail. A CP+NS merger would be on an even grander scale and other roads would likely seek to break the deal and perhaps seek other partners. Regulators and shippers would balk and expensive courtroom drama would drag on for years. I think the entire affair is a non-starter, but cheap money and inflated egos can sometimes make the impossible happen.
Tonight (11/17/2015) CP offered "sizable premium in cash and stock" to NS shareholders without any specifics. NS shares are up over 6% in after-hours trade. I'm not reading too much into the headline. It's as if CP wants to be seen as more than a wishful suitor, but doesn't quite have its plan fully knit together yet.
This should not even be allowed to take root. Our anti-monopoly laws were meant to prevent just this type of thing, so it will be interesting to see just how they trample that under foot. I'm sure that there will be plenty of greasing the way ongoing, back in Sodom on Potomac.
As a NS stock holder... it was NOT premium!!! With cash and stock trade... it equals out to less than 10%. I believe this is just a move by Harrison to bump up stock price so "someone" can dump some stock. Just opinion on that last sentence. JMS
Agree completely. I own a bit of NS too and am not enticed by CP's bid. I worry too about dividend taxation, as foreign dividends are taxed at a higher rate. I discovered this downside of foreign share ownership when I found myself a CN shareholder when they bought my IC shares. No real regrets though, as CN shares have done well.
Got this via an email newsletter. Unfortunately it fails to cite the original source. "Norfolk Southern, the second-largest railroad in the Eastern United States, has indicated its inclined to reject a merger with the Canadian Pacific. However, NS stockholders are prodding the management team to fix NS's industry-worst operating efficiency and its slow reaction to cut costs to offset cargo declines. The largest Eastern U. S. railroad, CSX, made a quick turnaround after rejecting a merger offer from the Canadian Pacific last year. CSX reacted by cutting workers at all levels and reducing other costs which led to higher earnings. According to data compiled by Bloomberg, analysts on average estimate CSX's per-share profit will increase 4% this year, while NS's will decline 17%. Currently, CSX is tracking as the only one of the U.S. railroads that's going to deliver earnings growth this year."
NS rejected the proposal. Good for them! Their reasons are right on target. http://www.usatoday.com/story/money...ific-transcontinental-railroad-deal/76771760/
Good move NS. I wonder if CP's hopes will fade or if they'll step up their offer? I hope it fades. This sort of thing has to be a tremendous distraction for senior managers at both roads. However, with their significant fall in coal tonnages and earnings, NS and CSX will be less able to chart their own destiny. I'll bet that both NS and CSX will be courted by BNSF, UP, CN and CP in coming years. The complexity of these combinations would be beyond imagination.
CP did make a new offer: http://www.nscorp.com/content/nscor...onrevisedreducedproposalfromcanadianpaci.html This one is actually less in overall value. Seems like an old business tactic. Reduce offer, trying to scare the potential acquisition into believing they need to jump now, or lose even more.
I think Wall Street is growing weary of CP's overtures as well. NS rose from $87 to $98, but has since fallen back to where it started despite CP's warmed over second effort. The second effort also involves some sort of voting trust to hold acquired NS shares to supposedly allow NS to operate independently while the merger is tied up in the courts. I hardly see how that resolves shareholder concerns.
There is an apparent hoax story beginning to circulate that NS has accepted the offer. People who do these things need to have both arms broken.
http://www.ctvnews.ca/business/cp-r...hern-rejects-revised-takeover-offer-1.2691256 They are really seeing something they can strip ($$$) to be after NS in this fashion. Humorous how they want us to believe EHH is the greatest railroader ever....
Ackman has been driving this from the beginning. He's the reason for the CP management shakeup a few years ago, he's the reason F the bid for CSX last year. Fred Fairely (butchering last name) basically said, that Harrison won't drop it.
