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Offline Wildrose-Wally  
#1 Posted : 18 April 2021 06:21:16(UTC)
Wildrose-Wally

Canada   
Joined: 22/12/2013(UTC)
Posts: 530
Location: Sunny Southern Alberta
CP-KCS_Map-1024x814.jpg

CALGARY, Alberta — Canadian Pacific’s proposed acquisition of Kansas City Southern will unite the two smallest Class I railroads and create the only North American system that will operate in the U.S., Canada, and Mexico.

The combination of the 12,500-mile CP and 6,700-mile KCS, announced today, is a classic end-to-end merger: The railways currently interchange in Kansas City, Mo., the only location where their systems meet.

This will likely help the deal win over U.S. regulators. KCS is exempt from the Surface Transportation Board’s more stringent Class I merger rules that since 2001 have effectively prevented combinations of the six major systems. The railroads expect the merger to gain regulatory approval in 2022.

“My guess is that, despite what I have thought was a more interventionist stance, STB approval is likely, as there is little to no overlap — and this is the only merger that by itself, as a standalone, might not trigger full rail consolidation, as any other pairing likely would,” says independent analyst Anthony B. Hatch.

The $25 billion deal ($29 billion including CP assumption of KCS debt) will enable CP to better compete against larger rival Canadian National, which has enjoyed three-coast access since it acquired Illinois Central in 1998. But CP will also extend its reach into Mexico, where KCS cross-border traffic has been growing by more than 10% annually due to rising intermodal, automotive, and refined products volume.

CP also gains access to the dozen Gulf of Mexico ports that KCS and KCS de Mexico currently serve. Last year CP regained access to the Atlantic at Saint John, New Brunswick, through its acquisition of the Central Maine & Quebec, whose line across Maine once was part of CP’s shortcut from Montreal to the Atlantic.

“This transaction will be transformative for North America, providing significant positive impacts for our respective employees, customers, communities, and shareholders,” said CP CEO Keith Creel. “This will create the first U.S.-Mexico-Canada railroad, bringing together two railroads that have been keenly focused on providing quality service to their customers to unlock the full potential of their networks. CP and KCS have been the two best performing Class I railroads for the past three years on a revenue growth basis.”

CP and KCS say they will launch new intermodal service linking Dallas and Chicago, where traffic will be able to connect with existing CP service to Eastern and Western Canada. CP also will enjoy long hauls on existing traffic, such as crude and grain bound for the Gulf Coast and Mexico, that it currently hands off to KCS in Kansas City.

The merger also will tie together auto production areas in Canada, Detroit, and Mexico and create new single-line service for vehicles produced at assembly plants in Mexico that are bound for consumer markets in the Midwest and Canada. Currently about 5% of CP’s auto volume comes from Mexico, where auto production has been growing in recent years.

Only 1% of CP’s overall traffic is cross-border with Mexico. But propane exports from Canada to Mexico have been surging since 2014. Mexico’s consumption of propane is among the highest in the world, and its propane production is declining. CP will enjoy long hauls for Mexican-bound propane shipments that originate in Alberta.

The new company, to be called Canadian Pacific Kansas City, will be based in Calgary and headed by Creel, who has extended his contract through 2026. Kansas City, current home to KCS, will serve as the U.S. headquarters. The system’s Mexico headquarters will remain in Mexico City and Monterrey, and CP’s current U.S. headquarters in Minneapolis-St. Paul “will remain an important base of operations,” CP says.

KCS, which connects with all six of the major systems, has been the subject of merger speculation for years. Last summer two infrastructure funds considered taking the railroad private, which prompted speculation in the rail industry that CP might seek to acquire KCS.

Former KCS CEO Michael R. Haverty — who built KCS into a cross-border system 25 years ago — says attempts to merge with CP more than a decade ago never jelled. Fred Green, who was then CP’s chief executive, feared a deal would spark opposition from Union Pacific, Haverty says.

“I do think this is a very good fit,” Haverty says.

Haverty suspects that last year’s private equity interest in KCS sparked consolidation talks with CP.

KCS was a north-south railroad in an east-west world until the North American Free Trade Agreement was signed in 1992. Haverty saw the opportunity to turn KCS from a Midwest-Gulf Coast regional into a cross-border system that could tap into free trade. In 1996, KCS gained the 50-year concession to operate what was then called Mexico’s Ferrocarril del Noreste, or Northeast Railroad.

Haverty expects CP-KCS deal to pass regulatory muster in the U.S. but says some concessions may be required in Mexico, where the federal regulator has become increasingly concerned about rail competition.

Most of KCS’s growth comes from linking production areas in Mexico with consumers in the U.S. and Canada, as well as exporting U.S. grain, U.S. and Canadian auto parts, and refined products to Mexico.

The KCS International Railway Bridge at Laredo, Texas, is the busiest rail border crossing in North America. KCS already had plans under way to add a second span across the Rio Grande at Laredo, where it also interchanges with Union Pacific.

The combined CP and KCS system will remain the smallest Class I by revenue. But at 19,200 miles CP-KCS is roughly the size of the 19,500-mile CN.
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Offline marklinist5999  
#2 Posted : 18 April 2021 12:45:21(UTC)
marklinist5999

United States   
Joined: 10/02/2021(UTC)
Posts: 1,145
Location: Michigan, Troy
Makes sense for Canada moving freight and oil to and from the gulf ports. AmeriMexiCanada trade. The Mexican plants get parts in by ships, assemble card, trucks, white goods, etc.Then they go by rail or truck north. Parts made in Mexico to American and Canadian plants also.
Offline Wildrose-Wally  
#3 Posted : 18 April 2021 14:20:46(UTC)
Wildrose-Wally

Canada   
Joined: 22/12/2013(UTC)
Posts: 530
Location: Sunny Southern Alberta
9597.jpg4579.jpg
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Offline Wildrose-Wally  
#4 Posted : 20 April 2021 04:51:56(UTC)
Wildrose-Wally

Canada   
Joined: 22/12/2013(UTC)
Posts: 530
Location: Sunny Southern Alberta
Heritage Units:

Riding The Rails_3_1000.jpgRiding The Rails_4_24.jpg
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Offline mike c  
#5 Posted : 20 April 2021 05:23:24(UTC)
mike c

Canada   
Joined: 28/11/2007(UTC)
Posts: 7,260
Location: Montreal, QC
Canadian Pacific Southern de Mexico?



Offline Wildrose-Wally  
#6 Posted : 20 April 2021 05:43:38(UTC)
Wildrose-Wally

Canada   
Joined: 22/12/2013(UTC)
Posts: 530
Location: Sunny Southern Alberta
According to the news article, the name of the merged companies would be "Canadian Pacific Kansas City", with the head office in Calgary.
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Offline jcrtrains  
#7 Posted : 20 April 2021 15:50:00(UTC)
jcrtrains

Canada   
Joined: 31/10/2009(UTC)
Posts: 550
Location: Toronto, Ontario
It is a very good move for CP.

I actually worked for CP in technology from 1992 to 1994, the only time I have actually not been in consulting. At the time, CP was quite advanced in technology but that still meant that the actual technology budget was less than the actual track weed control budget. That puts it in perspective.

Also at the time, CP had their own email system called Merlin. It was very advanced for it's time and incorporated an OS/2 frontend. It could even do attachments. It was sold to several other companies. The backend at CP took up three of the five mainframes. It was IMS (DB/DC) and at the time sysplexing wasn't available between mainframes and CP had built their own 'sysplex' technology to span the three mainframes.

What was also fascinating was how lean some of the acquisitions were from a technology perspective. In that period, CP bought the Soo line. Their technology team only had 15 programmers for the entire railroad.

CP was a great learning experience.
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Offline mike c  
#8 Posted : 20 April 2021 22:09:01(UTC)
mike c

Canada   
Joined: 28/11/2007(UTC)
Posts: 7,260
Location: Montreal, QC
The information that I had was that Kansas City Southern would continue to operate under that name (also KC Southern de Mexico) and retain it's corporate offices in Kansas City.

To make things more interesting, it was reported today that Canadian National (CN) had submitted a rival bid for the acquisition of KCS.

Stay tuned...

Regards

Mike C
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Offline Wildrose-Wally  
#9 Posted : 24 April 2021 04:21:31(UTC)
Wildrose-Wally

Canada   
Joined: 22/12/2013(UTC)
Posts: 530
Location: Sunny Southern Alberta
Even though Canadian National says their deal is subject to the same rules as the deal between CP and KCS, this is not exactly true. Canadian National is at this time a competitor with KCS, as they serve some of the same areas, whereas CP Rail and KCS only meet at one point, Kansas. The deal with CN would have to go through a rigorous examination by the Transportation board, and could not be approved in a short term like CP and KCS.

home-masthead-e1616251690496-1600x832.jpg
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Offline Wildrose-Wally  
#10 Posted : 15 May 2021 07:03:40(UTC)
Wildrose-Wally

Canada   
Joined: 22/12/2013(UTC)
Posts: 530
Location: Sunny Southern Alberta
CALGARY – May 14, 2021 – Canadian Pacific Railway Limited (TSX: CP) (NYSE: CP) (“CP”) today issued the following statement in response to the Department of Justice (“DOJ”) filing with the Surface Transportation Board (“STB”) regarding Canadian National’s (“CN”) proposed use of a voting trust in connection with its proposed combination with Kansas City Southern (“KCS”).

CP concurs with the DOJ’s objection to CN’s proposed use of a voting trust on the grounds that a CN merger with KCS would pose greater risks to competition than the CP-KCS agreement. The filing notes: “A CN-KCS transaction poses additional dangers to competition stemming from the potential elimination of direct, ‘parallel’ competition on routes served by both railroads, for example between Baton Rouge and New Orleans.” CN’s proposed use of a voting trust would create “threats to competition [that] would be present immediately after the CN voting trust is consummated.” And, DOJ added, “[i]t is particularly important to protect” the incentives of CN and KCS “to compete where, as here, CN and KCS appear to compete head-to-head on multiple parallel routes.”

The filing continues: “On May 6, 2021, the Board approved the proposed CP-KCS voting trust in Finance Docket No. 36500. Notwithstanding this decision, the Board should not permit the proposed CN voting trust because CN’s proposed acquisition of KCS appears to pose greater risks to competition than the risks posed by a CP-KCS merger.”

The DOJ’s position is consistent with CP’s assessment that CN’s proposal is illusory and offers unattainable value to KCS’ shareholders.

CP remains confident its friendly agreement is the only viable merger for KCS, as already validated by two favorable rulings by the STB. The STB approved CP’s use of a voting trust and affirmed KCS’ waiver from the new rail merger rules it adopted in 2001 because a CP-KCS combination is truly end-to-end, pro-competitive and together they would remain the smallest Class 1 railway.

https://futureforfreight...ature-of-cn-bid-for-kcs/
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Offline Wildrose-Wally  
#11 Posted : 27 September 2021 05:04:48(UTC)
Wildrose-Wally

Canada   
Joined: 22/12/2013(UTC)
Posts: 530
Location: Sunny Southern Alberta
The battle is over, CN lost and CP won.:

Calgary and Kansas City, Mo. – Sept. 15, 2021 – Canadian Pacific Railway Limited (TSX: CP, NYSE: CP) (“CP”) and Kansas City Southern (NYSE: KSU) (“KCS”) today announced they have entered into a merger agreement, under which CP has agreed to acquire KCS in a stock and cash transaction representing an enterprise value of approximately USD$31 billion1, which includes the assumption of $3.8 billion of outstanding KCS debt. The transaction, which has the unanimous support of both boards of directors, values KCS at $300 per share, representing a 34% premium, based on the CP closing price on Aug. 9, 2021, the date prior to which CP submitted a revised offer to acquire KCS, and KCS’ unaffected closing price on March 19, 20212.

https://futureforfreight...nking-u-s-mexico-canada/

Calgary will be the global headquarters of CPKC (Canadian Pacific Kansas City), and Kansas City, Missouri will be the U.S. headquarters. The Mexico headquarters will remain in Mexico City and Monterrey. CP’s current U.S. headquarters in Minneapolis-St. Paul will remain an important base of operations.
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Offline mkeigwin  
#12 Posted : 02 October 2021 03:57:11(UTC)
mkeigwin

United States   
Joined: 13/10/2017(UTC)
Posts: 36
Location: Massachusetts, Franklin
Thank you for posting this. Very interesting deal. Raising the stakes against BNSF and the UP.
Offline Wildrose-Wally  
#13 Posted : 09 October 2021 14:26:06(UTC)
Wildrose-Wally

Canada   
Joined: 22/12/2013(UTC)
Posts: 530
Location: Sunny Southern Alberta
Offline Wildrose-Wally  
#14 Posted : 17 October 2021 22:33:19(UTC)
Wildrose-Wally

Canada   
Joined: 22/12/2013(UTC)
Posts: 530
Location: Sunny Southern Alberta
On March 21, 2021, Canadian Pacific Railway (CPR) and KCS announced that CPR would purchase KCS for US$29 billion, which would allow the CP to own rail lines across the entire North American continent. Kansas City Southern CEO Patrick Ottensmeyer stated that the United States-Mexico-Canada Agreement signed a year earlier created a unique opportunity amid the recovery from the COVID-19 pandemic. The US Surface Transportation Board would first have to approve the purchase, which was expected to be completed by the middle of 2022.

However, a competing cash and stock offer was later made by Canadian National Railway (CNR) on April 20, 2021 at $33.7 billion. On May 13, 2021, KCS announced in a statement that they planned to accept the merger offer from CN, but would give CP until May 21 to come up with a higher bid. On May 21, KCS and CN agreed to a merger.

CN's merger attempt was damaged by a STB ruling on August 31, 2021 that the company's proposal to use a voting trust to assume control of KCS pending review of the merger by the board was denied, due to concerns about potentially reduced competition in the railroad industry. KCS backed out of the merger agreement made with CN on September 12, 2021, in favor of a new $31 billion offer from CP. Though CP's offer is lower than the offer made by CN, the STB has permitted CP to use a voting trust to take control of KCS.

Edited by user 18 October 2021 11:35:18(UTC)  | Reason: Not specified

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Offline Wildrose-Wally  
#15 Posted : 30 October 2021 10:28:36(UTC)
Wildrose-Wally

Canada   
Joined: 22/12/2013(UTC)
Posts: 530
Location: Sunny Southern Alberta
Canadian Pacific and Kansas City Southern File Merger Application with STB to Create Only Single-Line Rail Network Linking U.S.-Mexico-Canada

Canadian Pacific Railway Limited (TSX: CP, NYSE: CP) ("CP") and Kansas City Southern (NYSE: KSU) ("KCS") today announced they have jointly filed a railroad control application with the Surface Transportation Board ("STB") regarding the proposed transaction to create Canadian Pacific Kansas City ("CPKC"), the only single-line railroad linking the United States, Mexico and Canada.

https://futureforfreight...ol-Application-final.pdf

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Offline Wildrose-Wally  
#16 Posted : 22 November 2021 01:40:03(UTC)
Wildrose-Wally

Canada   
Joined: 22/12/2013(UTC)
Posts: 530
Location: Sunny Southern Alberta
A nice and shiny CP Rail train visiting KCS home town.

8163.jpg

A train led by four brand new AC4400CWM rebuilds on its way to the KCS Knoche Yard with the Kansas City downtown skyline in the background.

https://www.railpictures.net/photo/782511/

8163a.jpg

Four brand new AC4400CWM's lead this manifest through the Kansas City West Bottoms area.

https://www.railpictures.net/photo/782510/
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