Canadian Pacific to buy Kansas City Southern

[Slava]

Thought that this might be worth a thread as CP (no relation)is based in Calgary and this will continue to remain as the global headquarters of the corporation. The deal creates the only railway with a track system into Mexico and of course through the US and into Canada.

I wouldn’t say this is a done deal though. Years ago CP tried to buy Norfolk Southern and they weren’t able as US regulations posed issues. They’ve structured this deal a little differently, and maybe that will assuage concerns.

Anyway...hopefully others are interested as well!

(Only article I found at first is behind a paywall, but I’m sure there will be a lot more)

[calgaryred]

Originally Posted by Slava

Thought that this might be worth a thread as CP (no relation)is based in Calgary and this will continue to remain as the global headquarters of the corporation. The deal creates the only railway with a track system into Mexico and of course through the US and into Canada.



I wouldn’t say this is a done deal though. Years ago CP tried to buy Norfolk Southern and they weren’t able as US regulations posed issues. They’ve structured this deal a little differently, and maybe that will assuage concerns.



Anyway...hopefully others are interested as well!



(Only article I found at first is behind a paywall, but I’m sure there will be a lot more)

https://www.cbc.ca/news/canada/calga...gary-1.5958246

Sent from my SM-G930W8 using Tapatalk

[Fuzz]

Direct sombrero access. Sweet.

[bizaro86]

Be interesting to see if the US allows this. IIRC correctly they haven't been letting Class I railways merge for a long time. But these two only intersect in the Chicago area, and basically don't compete on a single route right now. Seems like it should be hard to block.

[I-Hate-Hulse]

Most notably, this gives CP access to the US Gulf Coast....and it's refineries....

[burn_this_city]

Originally Posted by I-Hate-Hulse

Most notably, this gives CP access to the US Gulf Coast....and it's refineries....

Rail to the gulf is $15-20/barrel, so it could definitely be part of it.

[Slava]

Originally Posted by I-Hate-Hulse

Most notably, this gives CP access to the US Gulf Coast....and it's refineries....

I’ve long felt that CN has the best track network on the continent in part due to this exposure. I’ll have to look and think about this now though (assuming the deal goes through).

[DoubleK]

Originally Posted by bizaro86

Be interesting to see if the US allows this. IIRC correctly they haven't been letting Class I railways merge for a long time. But these two only intersect in the Chicago area, and basically don't compete on a single route right now. Seems like it should be hard to block.

I think this one goes through for the reasons you've stated.

It's probably better than NS or CSX making the acquisition.

[Snuffleupagus]

Originally Posted by Fuzz

Direct sombrero access. Sweet.

Migrants might love it too

[bizaro86]

Originally Posted by DoubleK

I think this one goes through for the reasons you've stated.

It's probably better than NS or CSX making the acquisition.

Yeah, I think the overlap between NS or CSX would be too much, and I couldn't see them letting UNP or BNS become as dominant as that purchase would make them. And CN already bought a North South line. Unless they let the east and west railways merge in the US (which I doubt) this is the only railway merger that seems in any way possible.

That might actually be a point in its favor - it won't set a precedent that you could argue for more mergers later. You could even argue that CN buying Illinois Central sets a precedent that this should be allowed. That was 23 years ago though, so maybe not.

I hope this happens. Having the hq in Calgary is a big deal, and I think it would be good for the city.

[curves2000]

Hopefully this particular deal concludes with an increase in corporate head office employment in Calgary and generally more employment in Alberta. The combined entity may also contribute a higher overall tax haul to Alberta as well, although corporate accounting isn't my strong suit.

On a somewhat related matter, I read the book about CP and CN Rail's previous CEO's, Hunter Harrison. It was called Railroader and it was an excellent overall biography from a 4 time CEO. Love him or hate him, he was the Steve Jobs or whatever analogy of the railroad world and he owned it.

A couple of funny moments when running CP that made me laugh as a Calgarian. His first day on the job was July 2012, the Calgary economy was on fire and it was Stampede week. He showed up to head office in a suit and really couldn't find too many people there, everybody was out drinking and partying. He lost his mind. "Company burning through cash and people are out doing shooters??" or something like that.

As a ruthless cost cutter, he wouldn't hesitate to find the smallest of expenses to cut. He was down in the basement of some office and saw a bunch of older computers that were being shipped out via Fedex. Asked where they were being sent and was told Alyth rail yard, which is located in Calgary, less than 15 minute drive from corporate office. He lost his mind because of the fact that with Fedex packages, almost all travel via cargo plane to Tennessee, Fedex's Hub and than to their destination.

Either way hopefully this is a great, positive business story for Calgary and for Alberta

[dobbles]

I agree this would seem like a good candidate for a merger when looking at the Class I's left out there. A couple of the smaller ones combining to place more competition on the big boys could be a positive for the market.

[Vinny01]

Originally Posted by curves2000

Hopefully this particular deal concludes with an increase in corporate head office employment in Calgary and generally more employment in Alberta. The combined entity may also contribute a higher overall tax haul to Alberta as well, although corporate accounting isn't my strong suit.

On a somewhat related matter, I read the book about CP and CN Rail's previous CEO's, Hunter Harrison. It was called Railroader and it was an excellent overall biography from a 4 time CEO. Love him or hate him, he was the Steve Jobs or whatever analogy of the railroad world and he owned it.

A couple of funny moments when running CP that made me laugh as a Calgarian. His first day on the job was July 2012, the Calgary economy was on fire and it was Stampede week. He showed up to head office in a suit and really couldn't find too many people there, everybody was out drinking and partying. He lost his mind. "Company burning through cash and people are out doing shooters??" or something like that.

As a ruthless cost cutter, he wouldn't hesitate to find the smallest of expenses to cut. He was down in the basement of some office and saw a bunch of older computers that were being shipped out via Fedex. Asked where they were being sent and was told Alyth rail yard, which is located in Calgary, less than 15 minute drive from corporate office. He lost his mind because of the fact that with Fedex packages, almost all travel via cargo plane to Tennessee, Fedex's Hub and than to their destination.

Either way hopefully this is a great, positive business story for Calgary and for Alberta

I worked at CP for 7 years between Jan 2007 and late 2013. It was a pretty wild experience once Hunter Harrison took over and there were so many months of uncertainty. Jobs were being cut like crazy and they definitely went from trimming the fat to running lean. The guy he brought in to be the VP of our sales team was a piece of work to say the least.

I was so pumped because I got a package the week before we were supposed to move from Gulf Canada Square downtown to the Alyth office building they had constructed. I had such a great boss and he was so down when they were handing out packages but I knew the writing was on the wall. The restructuring had leaked and I found out who would be running the Sales team for my commodity and it was an individual who I didn’t have the best introduction to years earlier. It worked out well though as I got a better job almost immediately and used the money from the buyout for a down payment on the house we bought back in 2014. I will always be grateful to CP for giving me my first real job after University

[Bill Bumface]

CP was my first job out of school, and ~6 months later I was shipped off to IBM as part of their outsourcing deal. It was a quick introduction to how this whole "work" thing actually goes.

My biggest regret was not hopping in a freight locomotive to my Grandparents place near Salmon Arm. They had a standing offer for any employee to catch a ride, but the outsource came too quickly.

[I-Hate-Hulse]

Originally Posted by curves2000

Hopefully this particular deal concludes with an increase in corporate head office employment in Calgary and generally more employment in Alberta. The combined entity may also contribute a higher overall tax haul to Alberta as well, although corporate accounting isn't my strong suit.

I doubt it would lead to a substantial increase in Calgary head count. KCS's US offices will probably be retained, not closed. With operations moving further southward, certain functions might make sense to be US based too. For example, at one point anyways, many functions of CP's grain desk was moved to Minneapolis. Workers are cheaper there.

[RoadGame]

I suppose as a takeover rather than a merger there's less risk of a major rebranding?

IMO the CP liveries have roughly tracked Flames jerseys in the past couple decades... circa 2004 editions being pretty classic and after a decade of something worse, coming around again to something better.

AC4400 with solid sill stripe and original golden beaver crest being the pinnacle.

[Ironhorse]

Originally Posted by RoadGame

IMO the CP liveries have roughly tracked Flames jerseys in the past couple decades... circa 2004 editions being pretty classic and after a decade of something worse, coming around again to something better.

AC4400 with solid sill stripe and original golden beaver crest being the pinnacle.

The new Heritage livery (and the military units) on the new SD70acu are giving it a run for the money.

[bizaro86]

Originally Posted by RoadGame

I suppose as a takeover rather than a merger there's less risk of a major rebranding?

IMO the CP liveries have roughly tracked Flames jerseys in the past couple decades... circa 2004 editions being pretty classic and after a decade of something worse, coming around again to something better.

AC4400 with solid sill stripe and original golden beaver crest being the pinnacle.

I think a rebranding/new livery is likely. The combined company will be named, "Canadian Pacific Kansas City"

[Redliner]

Here is a great article that explains the transaction as well as some of the anticipated advantages and new traffic patterns. No paywall either:

https://www.railwayage.com/freight/c...RAchannel=news

KCS was exempt from the STB merger restrictions that were handed out to the Class 1s after the failed CN/BNSF merger in 1999. That fact, coupled with the KCS system's perfect end-to-end fit with CP's network, leads me to believe that this should have no problem getting approval as it does not decrease competition at all. It will be by far the most major transaction in the railway industry in the last 20 years and is a great move for CP.

As I understand it, no job losses are expected and they anticipate they will actually need to add employees over the longer term. The Calgary office should remain intact, although CP's current US Headquarters in Minneapolis will be moving to Kansas City. It will be interesting to see how things shake out as the two companies consolidate.

The only thing that sucks is the new name. "CPKC" sounds more like a radio station than a railway. It sounds like a complete re-branding will be coming once the merger is complete, and as one of the few remaining "truly Canadian" institutions, it will be sad to see the Canadian Pacific identity disappear.

[Manhattanboy]

Originally Posted by Redliner

Here is a great article that explains the transaction as well as some of the anticipated advantages and new traffic patterns. No paywall either:

https://www.railwayage.com/freight/c...RAchannel=news

KCS was exempt from the STB merger restrictions that were handed out to the Class 1s after the failed CN/BNSF merger in 1999. That fact, coupled with the KCS system's perfect end-to-end fit with CP's network, leads me to believe that this should have no problem getting approval as it does not decrease competition at all. It will be by far the most major transaction in the railway industry in the last 20 years and is a great move for CP.

As I understand it, no job losses are expected and they anticipate they will actually need to add employees over the longer term. The Calgary office should remain intact, although CP's current US Headquarters in Minneapolis will be moving to Kansas City. It will be interesting to see how things shake out as the two companies consolidate.

The only thing that sucks is the new name. "CPKC" sounds more like a radio station than a railway. It sounds like a complete re-branding will be coming once the merger is complete, and as one of the few remaining "truly Canadian" institutions, it will be sad to see the Canadian Pacific identity disappear.

I think the formal name will be Canadian Pacific Kansas City Railway.