Fri, Mar. 11, 6:29 AM
- Canadian Pacific Railway (NYSE:CP) CEO Hunter Harrison is facing an uphill battle to convince CSX - not just Norfolk Southern (NYSE:NSC) - of the merits of a merger.
- "Neither one of them think they fit well with us. So I've got a selling job to do if we're going to make this successful," he told Bloomberg Television, confirming for the first time that CSX didn't welcome Canadian Pacific's overtures.
- Harrison has been aiming for an acquisition that would create a coast-to-coast railroad, eliminating rail-car exchanges between carriers.
Wed, Mar. 2, 6:58 PM
- While a takeover of CSX is unlikely, Citi analyst Christian Wetherbee believes the railroad could be acquired for a price that values it in the "upper $30s" per share if a strategic buyer were to come forward.
- WSJ reported yesterday that Canadian Pacific Railway (NYSE:CP) offered to acquire CSX for "$20B plus" in late January and CSX rejected the offer, but CP remains interested in a deal.
- Wetherbee continues to believe CSX can fetch a takeover price equal to 11x EBITDA, but says his estimates for CSX have dropped since the previous time he estimated the company's value in a takeover scenario.
- The analyst has a $29 price target and Buy rating on CSX shares.
Tue, Mar. 1, 5:47 PM
- Shares in CSX (CSX +2.1%) are jumping, up 7.1% after hours, on a Dow Jones report that it rejected an overture from Canadian Pacific Railway (CP +1.5%) to talk takeover in January.
- CP pursued a difficult proxy battle for Norfolk Southern this winter, dropping that plan in early February after heavy opposition, but pursuing a long-shot bid to use a voting trust to complete a hostile takeover.
- Updated 6:09 p.m.: Canadian Pacific is still devoted to its pursuit of NSC (NSC +2.9%) as well as maintaining in interest in CSX, despite both pursuits being unwelcome. Both targets have an eastern U.S. stronghold that interests CP, which had also gone after CSX in 2014 (and failed then as well).
- Previously: Canadian Pacific goes extra mile in Norfolk merger effort (Feb. 16 2016)
- Previously: Norfolk Southern: More talks with CP 'not in best interest' (Feb. 09 2016)
- Previously: Report: Canadian Pacific to pull plug on proxy battle for Norfolk Southern (Feb. 09 2016)
Tue, Jan. 19, 5:58 PM
- Canadian Pacific Railway (NYSE:CP) files a complaint with the U.S. Department of Justice alleging some of its competitors have worked together to block its attempt to merge with Norfolk Southern (NYSE:NSC).
- "The fact that these major railroads have joined to work so feverishly against CP’s proposal speaks volumes about their concerns regarding the impact the transaction would have on their competitive positions,” CP says in its letter to the DoJ.
- Union Pacific (NYSE:UNP), for one, disputes the allegation, saying “We have communicated with other railroads for the purpose of petitioning the government. We oppose this merger, and we are prepared to discuss our views with the government."
- Related tickers: CSX, BRK.A, BRK.B
Fri, Jan. 15, 5:45 PM
- The U.S. Federal Railroad Administration expects to scrutinize the "significant safety hurdles” that would result from merging any of the major U.S. railroads, the head of the agency tells WSJ, a move that could place another obstacle in the way of Canadian Pacific’s (NYSE:CP) takeover attempt for Norfolk Southern (NYSE:NSC).
- The FRA is not empowered to block railroad mergers, which require approval by the Surface Transportation Board, but it can work with railroads on a “safety integration plan" to ensure safe operations in the case of a merger under largely untested rules put in place in 2001.
- Shippers have been filing letters with the STB to oppose a CP-NSC merger, concerned about potential price increases and service problems; other railroads also oppose the merger, including CSX, Union Pacific (NYSE:UNP) and BNSF (BRK.A, BRK.B).
Dec. 11, 2015, 4:45 PM
- Select railroad stocks were an island in the storm today after Bloomberg reported that Berkshire Hathaway's BNSF Railway (BRK.A, BRK.B) is considering making a competing bid for Norfolk Southern (NYSE:NSC).
- While BNSF Executive Chairman Matt Rose does not favor more North American rail mergers, he tells Bloomberg the company would not sit on the sidelines in any fresh dealmaking: “If there is consolidation to be had, we would participate as well.”
- Rose’s remarks raise the prospect of another suitor for NSC, which already has turned down Canadian Pacific (NYSE:CP); CSX, NSC’s larger rival in the eastern U.S., would be “very much in play” if CP succeeded with its effort, Rose says, noting that “we’ve never in this industry just done one merger" at a time.
- In today's trade: NSC +2%, CP -2%, CSX +4.1%, UNP -0.2%, KSU -0.1%, CNI -2.1%.
Dec. 4, 2015, 2:57 PM
- Railroad stocks are broadly lower following Norfolk Southern's (NSC -1.2%) sharp rebuke of Canadian Pacific Railway's (CP -4.5%) takeover bid "at any price" and a BofA Merrill Lynch negative research note on the sector.
- CEO James Squires tells Bloomberg that NSC execs “haven’t talked to a single customer that supports the idea" of merging with CP, and that “our customers’ responses range from highly skeptical to vehemently opposed."
- Citing volume declines and weak trends that look to continue into 2016, BofA downgrades CSX (CSX -1.3%) and Union Pacific (UNP -1.2%) to Neutral from Buy, as the firm remains negative on rails with significant coal exposure, and cuts Kansas City Southern (KSU -1.5%) and Genesee & Wyoming (GWR -5.3%) to Underperform from Neutral; the firm lowers KSU due to its growth premium in an environment of slowing growth and cut GWR due to its commodity exposure.
- BofA reiterates its Buy rating on Canadian National (CNI -1.2%), citing CNI's significantly lower coal exposure, robust intermodal share gains and attractive risk/reward returns.
Nov. 9, 2015, 2:10 PM
- Shares of Norfolk Southern (NSC +12.2%) and Canadian Pacific (CP +6%) spike on reports the companies are considering a merger.
- The speculation is giving a lift to a good portion of the sector with CSX (CSX +3.7%), Union Pacific (UNP +2.2%), and Kansas City Southern (KSU +2.9%) all notable movers.
- Railroad M&A talk has picked up this year as some market caps have moved down.
Jun. 11, 2015, 5:49 PM
- CSX jumped 3% today amid continued railroad merger speculation as well as a 9.4% increase in the company’s intermodal cargo reported in yesterday’s weekly traffic update from the Association of American Railroads.
- "The bigger weight is around the speculation of the merger," Cowen's Matt Elkott told Bloomberg; once Canadian Pacific CEO Hunter Harrison mentioned a merger attempt last October, "it wasn't going to go away," the analyst said.
Nov. 7, 2014, 8:46 AM
- Norfolk Southern (NYSE:NSC) +3.5% premarket after Bill Ackman said Canadian Pacific Railway (NYSE:CP) might be interested in a rival to one-time target CSX.
- While Ackman did not name NSC in his comments yesterday, he appeared to have the company in mind by describing his takeover candidate in relation to CSX, as the two carriers go head-to-head in the U.S. east of the Mississippi River.
- “I think something happens,” Ackman said, noting that CP CEO Hunter Harrison believes "pro-competitive" railroad mergers will be permitted by regulators.
Oct. 22, 2014, 5:57 PM
- Railroad stocks were hammered today after some executives threw cold water on the idea that the railroad industry is ripe for consolidation.
- Norfolk Southern (NYSE:NSC) CEO said during today's earnings conference call that he thinks a major merger would be “highly problematic,” since in the past they have led to "significant service problems for some period of time" and potential cost savings such as overlapping routes do not exist as much anymore.
- Yesterday, Canadian Pacific (NYSE:CP) CEO Hunter Harrison confirmed that talks with CSX fell apart after several meetings because they couldn't agree on key issues, and added that a deal with Kansas City Southern (NYSE:KSU) is unlikely because the stock is expensive.
- In today's trade: NSC -3%, CP -1.6%, CSX -0.6%, KSU -2.7%, UNP -1.8%, GWR -2.6%, CNI -0.9%, BRK.B -0.9%.
Oct. 20, 2014, 7:18 AM
Oct. 14, 2014, 3:23 AM
- Discussions between Canadian Pacific Railway (NYSE:CP) and CSX (NYSE:CSX) about a merger are still possible despite the latter rebuffing an approach from CP, the WSJ reports.
- CP CEO Hunter Harrison believes that a tie-up would help make rail infrastructure more efficient, such as with the handover of goods from one operator to another.
- However, analysts, rivals and shippers fear that any merger would exacerbate congestion delays and increase costs.
- "I think it’s a common belief that now would not be a good time," says a top executive at a major railway company, "because of the regulatory change that would accompany it and the upheaval it would cause the industry."
Oct. 13, 2014, 6:33 PM
- Canadian Pacific Railway (NYSE:CP) reportedly approached CSX about a merger, but several analysts say such a deal has virtually no hope of getting a green light from regulators.
- U.S. Surface Transportation Board rules on Class 1 railway mergers have "an arguably impossible hurdle rate," Credit Suisse analyst Allison Landry says, which makes the deal a "non-starter.”
- At the least, the agency would want CP and CSX to allow other operators to run over their network, and likely want assurances that the merger would alleviate traffic problems that have snarled railroads, particularly around Chicago.
- CP may have an ace up its sleeve: One of its directors chaired the STB and its predecessor agency during 1995-2002, and would bring important knowledge of the regulatory requirements to any possible deal.
- Despite the unlikelihood of a deal, CSX jumped 5.9% during today's trade; CP shares slipped 2.3%.
Oct. 13, 2014, 10:08 AM
- There's some bets being placed on M&A activity within the railroad sector after a weekend report of interest by Canadian Pacific in CSX (CSX +12.6%) stirs the pot.
- Gainers: Norfolk Southern (NYSE:NSC) +5.1%, Kansas City Southern (NYSE:KSU) +4.2%, Canadian Pacific (NYSE:CP) +3.2%, Union Pacific (NYSE:UNP) +1.0%, Canadian National Railway (NYSE:CNI) +1.3%.
Oct. 12, 2014, 4:11 PM
- Canadian Pacific Railway (NYSE:CP) reportedly approached CSX Corp. (NYSE:CSX) during the past week about a potential merger that would unite two of North America's largest railroad operators.
- The approach was rebuffed; it is unclear whether CP has since shelved the effort.
- A deal would create an industry giant with a combined market cap of $62B.
- Any deal would be subject to review by the U.S. Surface Transportation Board, which has a history of intervening.
- Source: WSJ