In the last 24 hours, the Canadian news has been swamped with news about CP breaking up its 5 major assets - the railroad being one of them - and no reaction here. For one, I will be sorry to see an American or any foreign country take it over, if it is on the chopping block. CP is Canada and I will be sorry to see it go, economics be damned!
I predicted this last week CPR set to become an acquisition target, analysts say TORONTO -- If investors approve the spinoff of Canadian Pacific Railway, the company will begin the new century as it began the last one: as an independent railway company, the National Post reports. The question is, does it have a future? Faced with low commodity prices and tough competition both from rival railways and from the trucking industry, CPR has been struggling to make itself more profitable. But observers believe the company that helped meld Canada together is set to become an acquisition target. Indeed, Dick Davidson, the chief executive of Union Pacific Corp., a leading U.S. railway, told analysts recently his company has already taken "a hard look" at buying CPR. And just last month, Paul Tellier, the chief executive of Canadian National Railway Co. said CN would also consider buying CP, provided the proper regulatory framework is put in place. "There is no question that combining this railroad with CN would result in a tremendously more efficient combined operation," Avi Dalfen, an analyst at Research Capital Corp., said yesterday. For their part, officials at CPR's parent company have been coy about the issue. "If there is going to be serious consolidation in the railway industry in North America, in one form or another CPR would have to be involved," said David O'Brien, chief executive of Canadian Pacific Ltd. "So I don't think [the spinoff] changes anything except that now they have their own currency in terms of their own shares and if they see opportunities that make sense, they can exploit those." With a network of more than 14,000 miles of track spanning both the United States and Canada, CPR is regarded as one of North America's leading players, accounting for about 30% of the parent company's total sales in 1999. Founded in 1881 on the idea of linking Canada's fertile heartland with the populous East, the CPR introduced the first trans-Canada service in 1886, ushering in a new era of prosperity. Over the years, the company branched out into other areas, including shipping, aerospace, hotels, real estate development and oil. While being part of a major conglomerate may have helped CPR in the early years, more recently it has been a hindrance. Over the past decade, the North American railroads have gone through a period of major consolidation. But instead of taking advantage and making some cheap acquisitions, CPR mostly stuck to its knitting. "There were lots of major transactions that CPR was not party to, and that resulted in many of its peers becoming much larger companies," said Research Capital Corp.'s Mr. Dalfen. "Being part of a conglomerate has not helped CPR." Because it missed that opportunity, CPR cannot be counted among the leading North American railroads, Mr. Dalfen said. Observers cautioned that under the current timetable, the spinoff of CPR will not take place until the fall, and the competitive landscape could change significantly between now and then. Another consideration is the moratorium on mergers by U.S. railroads that is expected to end this summer. The moratorium was put in place by U.S. regulators to give them more time to rewrite the rules. It effectively killed all major transactions, including CN's planned combination with Burlington Northern Santa Fe Corp. (Next Story) Back to News Index
<BLOCKQUOTE>quote:</font><HR>Originally posted by Davecn5623: you got that right man CN will have all of Canada <HR></BLOCKQUOTE> I don't think CNR has a chance of getting their little hands on CP. If there were to be a merger/buyout to get CPR it would most likelly be UP. CN couldn't get it as they would then have a monopoly...but if UP got it it would be just the same as when CPR was here. 2 competitive railroads! Happy Railroading! Dane N.
Both CP and UP are VERY PROUD and arrogant railways... I wounder whos name will remain standing if they merge?
<BLOCKQUOTE>quote:</font><HR>Originally posted by BC Rail King: I don't think CNR has a chance of getting their little hands on CP. If there were to be a merger/buyout to get CPR it would most likelly be UP. CN couldn't get it as they would then have a monopoly...but if UP got it it would be just the same as when CPR was here. 2 competitive railroads! Happy Railroading! Dane N. <HR></BLOCKQUOTE>The STB won't let that happen . The UP can't run what they got now smoothly . The logical merger would be with CN , BUT I don't really care as long as I get a pay check every week . The UP is laying off thousands of employees and are making operational cuts , the last thing they need to do is merge [ 15 February 2001: Message edited by: Davecn5623 ]
I haven't heard anyone mention a road which could be a big player in a merger scenario involving CP (or CN, or however the next round of mergers shakes out)--Kansas City Southern--with connections at KC, Chicago, along the former IC, and going on in to Mexico--any comments?
Rail America...they were number three largest in Canada, displacing BC Rail. My understanding is the BC Rail is back to the number #3 spot, but it could be Rail America.
Strange things happen. There used to be Canadian Pacific Airlines. Great competition for Air Canada. CPA was taken over by a smaller airline called Pacific Western and renamed Canadian. It has now been taken over by Air Canada. Is it therefore possible the same thing could happen with CN taking over CP? This monoply thing doesn't seem to bother our current politicians. Whatever, we Canadians would like to keep this whole thing Canadian.
