First Trans-North America Freight Rail Network

Keep an eye on a Proposed Tie-UP between Canadian and American Railroads.

The Merger would create the First Trans-North America Freight Rail Network, if Canadian Pacific (CP) gets the OK, to Buy Kansas City Sourthern (KCS).

KCS's Freight Network connects Industrial Centers in Mexico with Tracks throughout the Sourthern U.S.

It's a Long-Term bet on the Interxonnected North American Economy.

But U.S. Regulators generally Frown on such Mergers.

Twice before, CP has tried to buy a U.S. Railroad, only to be thwarted by Regulators or Rival Firms.

in May, Regulators have Approved CP's Plan for Acquiring KCS, if KCS Picks CP’s $25 Billion Bid over Rival Canadian National (CN)’s $33.7 Billion Offer.

The Federal Surface Transportation Board (STB), said it would Accept CP's Plan to set up a Voting Trust that would acquire KCS and Own the Railroad while the Board Reviews the Deal to determine whether to Approve it.

But Approving the Trust Agreement doesn't mean Regulators would eventually OK the Deal.

The Board has said it will Review any Deal involving KSC carefully to determine if it would Enhance Competition and serve the Public Interest. That Review could take more than 18 months. If Regulators ultimately Reject the Deal, then the Voting Trust would Sell-Off KCS, so it could remain Independent.

CN has Submitted a nearly Identical Plan to Set-Up a Voting Trust if KCS decides to Accept its Bid. The Board has yet to Rule on that Voting Trust Proposal, which was Submitted about a Month after CP's.

The Two Canadian Railroads have been in a Public-Relations Battle, with each Portraying its Bid as Superior. Meanwhile, KCS is Reviewing both Proposals to determine which would be best.

CP has said that combining KCS and CN would Hurt Competition because both those Companies have Rail Lines that Compete for Business between the Midwest and the Gulf Coast.

CP’s Network connects to KCS in Kansas City, Missouri, but those Two Railroads don’t Overlap elsewhere.

CN has said it doesn't believe its Offer would Hurt Competition, and it is Confident it could address any Competitive Concerns later in the Review Process after its Voting Trust Plan is Approved if KCS chooses its Offer.










NYC Wins When Everyone Can Vote! Michael H. Drucker