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Post by valenciajim on Nov 25, 2015 13:21:40 GMT -8
Your explanation is typical of Ackman's tactics. Cost cutting can only go so far. CP is effectively in a duopoly north of the border, so it would appear that Canadian traffic is a zero sum game. Sort of like Coke and Pepsi--if either wants to increase market share it comes by reducing prices and that usually yields a sub-optimal result.
I suspect that the only way CP can grow sufficiently to meet Ackman's expectations is to getter a greater share of the US market. I am not certain whether CP's pockets are deep enough for that. Furthermore, if the government were to let NS get acquired, I would think that UP and BNSF would not stand by and let the grass grow between their toes. I seriously doubt that CP could compete with those two railroads in a biding war for NS. I think it more likely that CP could get acquired by NS, if Canadian and US regulators would allow that. Maybe Ackman maximizes his profit by having CP be the subject of a bidding war by major US railroads.
Just my two cents.
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Post by stevef45 on Nov 26, 2015 21:46:56 GMT -8
Anyone know how Conrail shared assets would end up if CP were to end up purchasing NS since NS and CSX both control/own CRSA?
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Post by valenciajim on Nov 28, 2015 10:10:24 GMT -8
Steve,
I suspect that is a deal point to be worked out, but I suspect that a CP/NS entity would likely step into NS' shoes unless the regulators objected.
Jim
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Post by markfj on Dec 4, 2015 7:06:51 GMT -8
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Post by The Ferro Kid on Dec 4, 2015 9:07:20 GMT -8
Good news! There hasn't been a RR merger since Burlington Northern (if that) that was in the public interest. |
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Post by calzephyr on Dec 4, 2015 9:10:45 GMT -8
Good! Too many mergers have caused the loss of many great Railroad names and Flags. Yahoo release. Norfolk Southern has rejected Canadian Pacific's cash-and-stock proposal to combine the two railroads. Last month Canadian Pacific offered $46.72 in cash and 0.348 shares in the combined company. Norfolk Southern Corp. said Friday that its board determined the proposal was "grossly inadequate, creates substantial regulatory risks and uncertainties that are highly unlikely to be overcome and is not in the best interest of the company and its shareholders." In a letter sent to Canadian Pacific CEO E. Hunter Harrison and Chairman Andrew Reardon, Norfolk Southern said that it felt the regulatory review process for the proposed deal would take two years or more, with a very low likelihood of approval. Even if it were approved, Norfolk Southern said it would be "in limbo" for that time period, "causing loss of momentum and disruption to our business and operations." Norfolk Southern said that it believes the ongoing execution of its strategic plan is superior to Canadian Pacific's proposal. Canadian Pacific said that it is reviewing Norfolk Southern's response. Federal regulators haven't approved any major railroad mergers in more than 15 years. One of the only major deals in recent years is when Warren Buffett's Berkshire Hathaway conglomerate bought BNSF railroad in 2010. Shares of Norfolk Southern dropped $5.78, or 6.2 percent, to $87.33 in morning trading, while Canadian Pacific's stock fell $5.79, or 4.1 percent, to $135.12. |
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Post by Spikre on Dec 4, 2015 13:07:27 GMT -8
 may have worded it a bit differently,but this is the Response expected from NS. $43. and change for Stock in the $90.00 Range ?? CP must be a Big Believer in the P.T. Barnum way of dealing with other Business's. personnaly believe that CP Management and Stock holders are Fools to even try such an assinine deal. Spikre 
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Post by atsfan on Dec 4, 2015 13:09:12 GMT -8
This buyout (not merger) would be a disaster except for a handful
Of fund managers and executives. It's only purpose is to help drive short term stock
Gain by cuts and slashing.
Of course that is the same with airline mergers and all of those are approved once the bribes are big
Enough. Donate enough to the right place and anything can and will be approved.
Workers and shippers would be screwed. But so far they have proven irrelevant to the process.
CP might go back and sweeten the deal. But the insiders have already made millions by simply sending
The letter and cashing in on the bump.
I
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Post by atsfan on Dec 4, 2015 13:10:09 GMT -8
may have worded it a bit differently,but this is the Response expected from NS. $43. and change for Stock in the $90.00 Range ?? CP must be a Big Believer in the P.T. Barnum way of dealing with other Business's. personnaly believe that CP Management and Stock holders are Fools to even try such an assinine deal. Spikre Spike CP insiders made millions off of this already on the stock bump |
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Post by fr8kar on Dec 4, 2015 14:51:15 GMT -8
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Post by The Ferro Kid on Dec 4, 2015 15:48:15 GMT -8
SNIP Of course that is the same with airline mergers and all of those are approved once the bribes are big Enough. Donate enough to the right place and anything can and will be approved. SNIP EXACTLY! We used to have a concept known as Antitrust. It's been rendered worthless by money crossing palms. |
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Post by valenciajim on Dec 6, 2015 11:13:44 GMT -8
Yesterday's Wall Street Journal had a lengthy article about NS' response. CP's stock dropped 4% on the news of the rejection while NS stick fell 1%. It is interesting to note that the almost all the points in the article were points already discussed in this thread. Maybe the author of the article is a model railroader? LOL!
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Post by calzephyr on Dec 8, 2015 6:41:13 GMT -8
They are back with a new offer today. 12/8/2015
Canadian Pacific has revised its takeover bid for Norfolk Southern, saying that it should ease fears that the railroad deal would be shot down by regulators.
The new offer is valued at $91.62 per share and includes $32.86 in cash per share and a fixed exchange ratio of 0.451 shares in the combined company.
The prior offer, which had a value of $92.06 per share, included more cash but fewer shares in the new railroad.
Norfolk Southern Corp. rejected the initial bid, saying it was grossly inadequate and had regulatory risks. It said Tuesday that the new offer was more uncertain and risky, in part because there was less cash consideration.
The company also says that the revised proposal from Canadian Pacific Railway Ltd. is worth less than what its board had initially found inadequate.
Federal regulators haven't approved any major railroad mergers in more than 15 years. One of the only major deals in recent years is when Warren Buffett's Berkshire Hathaway conglomerate bought BNSF railroad in 2010.
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Post by atsfan on Dec 8, 2015 13:12:02 GMT -8
They are back with a new offer today. 12/8/2015 Canadian Pacific has revised its takeover bid for Norfolk Southern, saying that it should ease fears that the railroad deal would be shot down by regulators. The new offer is valued at $91.62 per share and includes $32.86 in cash per share and a fixed exchange ratio of 0.451 shares in the combined company. The prior offer, which had a value of $92.06 per share, included more cash but fewer shares in the new railroad. Norfolk Southern Corp. rejected the initial bid, saying it was grossly inadequate and had regulatory risks. It said Tuesday that the new offer was more uncertain and risky, in part because there was less cash consideration. The company also says that the revised proposal from Canadian Pacific Railway Ltd. is worth less than what its board had initially found inadequate. Federal regulators haven't approved any major railroad mergers in more than 15 years. One of the only major deals in recent years is when Warren Buffett's Berkshire Hathaway conglomerate bought BNSF railroad in 2010. CP is just working to make some more quick cash on the offer. The last thing thr USA needs is the raiders from CP ruining a pretty solid transportstion company by slashing and cutting. Rejected and fought hard against I hope. |
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Post by gevohogger on Dec 8, 2015 13:49:20 GMT -8
They are back with a new offer today. 12/8/2015 Canadian Pacific has revised its takeover bid for Norfolk Southern, saying that it should ease fears that the railroad deal would be shot down by regulators. The new offer is valued at $91.62 per share and includes $32.86 in cash per share and a fixed exchange ratio of 0.451 shares in the combined company. The prior offer, which had a value of $92.06 per share, included more cash but fewer shares in the new railroad. Norfolk Southern Corp. rejected the initial bid, saying it was grossly inadequate and had regulatory risks. It said Tuesday that the new offer was more uncertain and risky, in part because there was less cash consideration. The company also says that the revised proposal from Canadian Pacific Railway Ltd. is worth less than what its board had initially found inadequate. Federal regulators haven't approved any major railroad mergers in more than 15 years. One of the only major deals in recent years is when Warren Buffett's Berkshire Hathaway conglomerate bought BNSF railroad in 2010. The last thing thr USA needs is the raiders from CP ruining a pretty solid transportstion company by slashing and cutting. Rejected and fought hard against I hope. I agree. I suspect the shippers will be unanimously opposed to this, if their opinion counts anymore in this day and age. CP will just drive away customers like Harrison has done on all his properties. I feel bad for the shippers who will face higher transportation costs (after CP drives them away from the rails) and especially for the railroaders who will lose their jobs if this goes through. NS holds a lot of cash reserves and real estate holdings and CP smells the money. |
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Post by Deleted on Dec 8, 2015 22:26:02 GMT -8
Neither stock is doing all that well right now-NSC is off 23% from their 52 week high, but CP is off over 36%. This smells like CP's management is hoping to buy more time before they're booted by their shareholders. It reminds me a lot of the HP takeover of Compaq, which bought Carly Fiorina another 18 months. That didn't benefit either company, and neither will this merger.
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Post by Spikre on Dec 9, 2015 11:37:52 GMT -8
 CP is just a bunch of Scum Sucking Clowns !! and it does sound like they are desparetly buying Time. lets hope NS sends them back to Selkirk on a Greased Rail !! Spikre
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Post by calzephyr on Dec 9, 2015 15:00:05 GMT -8
Well!!!!! This is interesting. Hopefully, this will be shut down by some method to save one of the great railroads left in America.
CP Rail takes gloves off after Norfolk Southern rejects revised takeover offer
MONTREAL -- Canadian Pacific Railway has dropped the gloves in its battle to acquire Norfolk Southern after the U.S. railway immediately rejected a revised takeover offer.
The Calgary-based company enlisted the help of activist U.S. investor Bill Ackman to challenge the qualifications of Norfolk Southern CEO James Squires and opened the door to launching a hostile bid if the board of the Virginia company continues to oppose negotiations.
"We are going to work and do everything at our disposal to get this to the shareholders and get a resolution to it," Canadian Pacific chief executive Hunter Harrison said Tuesday during a conference call. "If that calls for a proxy, so be it."
After initially trying to strike a friendly deal, Canadian Pacific is now adopting the playbook successfully led by Ackman in 2012 to overhaul Canadian Pacific, the country's second-largest railway.
Ackman, a large shareholder in Canadian Pacific, said Norfolk Southern's opposition is the same response he faced when he moved to replace Canadian Pacific's old guard. They denigrated Harrison's plan to improve efficiency as "unrealistic and unachievable," but under his leadership, costs were lowered ahead of schedule, Ackman said.
Harrison can bring about the same turnaround for Norfolk Southern, ultimately resulting in a merged company that would become North America's largest railway, Ackman said.
"What I like about 71-year-old CEOs is they're motivated to get things done promptly," Ackman said of Harrison during the call.
Canadian Pacific (TSX:CP) said in a letter to Norfolk Southern's CEO that under the amended bid, his company's shareholders would own 47 per cent of the newly merged company, up from 41 per cent.
The revised deal would see Norfolk Southern shareholders receive $32.86 in cash and 0.451 shares of stock in the combined company -- a bid Canadian Pacific characterized as a "substantially more financially attractive offer."
The offer put forth last month would have seen Norfolk Southern shareholders receive $46.72 in cash and 0.348 shares in the new railroad.
Related Stories
◾ CP Rail could boost Norfolk bid up to US$35.8B: analyst
Although the revised offer contains less cash and more equity than the one put forward a month ago, shareholders would receive them in May instead of the end of 2017.
Canadian Pacific said it believes the total value of the stock and cash offer to Norfolk Southern shareholders will be worth US$125 to US$140 per share in May when one of the railways, likely Canadian Pacific, is put into a voting trust and shares of the new company begin to trade in Toronto and New York.
Harrison would quit and sever all financial ties with Canadian Pacific to run Norfolk Southern until 2018 or 2019, when Canadian Pacific chief operating officer Keith Creel would take over to run the merged company.
The two companies would merge in the fall of 2017 after the U.S. regulator gives its approval. If the merger isn't sanctioned, the voting trust would end and the two companies would cut ties, with Harrison remaining at the helm of Norfolk Southern.
Ackman said he hopes large shareholders in Norfolk Southern who have approached Canadian Pacific will call their company's board and management to convince them to "come to their senses."
He said Squires, who also serves as Norfolk Southern's chairman, doesn't have the operational experience to deliver improved performance as he has promised, in contrast to Harrison's 50-year career as "the greatest railroader of all time."
"What happens in situations like this is that pride gets in the way," Ackman said of Squires' efforts to preserve his job.
Norfolk Southern did not return a call seeking a response to Ackman's comments. But it said in a statement earlier in the day that Canadian Pacific's new bid is less valuable than the previous one, which it already concluded was "grossly inadequate."
"In addition to being grossly inadequate, the proposal is based on a voting trust structure that we reviewed and do not believe would be approved by the STB," Squires said in the statement, referring to the U.S. Surface Transportation Board.
Canadian Pacific said the revised bid would ease any regulatory concerns over the proposed merger, but Norfolk Southern released an opinion from two former STB chairmen who believe the regulator would not approve any voting trust structure because it wouldn't be in the public interest.
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Post by fr8kar on Dec 9, 2015 18:05:34 GMT -8
This is rich: "...in contrast to Harrison's 50-year career as "the greatest railroader of all time."
Ackman is way off base here. Cutting an existing railroad to the bone and destroying employee morale that his predecessors helped build does not put Harrison in the same league as James J Hill, E H Harriman or Cornelius Vanderbilt. Hell, he's not in the same league as Richard Davidson or Richard Grayson, both of whom took a merged railroad and made it better. What did Harrison do exactly that earns any distinction as good or even acceptable as a leader in the rail industry?
Ackman's puppet is a failure and Ackman should seek his fortune elsewhere lest he be allowed to further dismantle the rail infrastructure in North America.
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Post by atsfan on Dec 9, 2015 18:22:09 GMT -8
Ackman is a clown.
This story reads like it is from The Onion.
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Post by peoriaman on Dec 10, 2015 4:52:51 GMT -8
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Post by jonklein611 on Dec 10, 2015 5:24:33 GMT -8
Does this mean more Heritage Units?  |
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Post by curtmc on Dec 10, 2015 6:24:10 GMT -8
Here is the "kicker" with the hostile takeover... IF enough shareholders sell into it, the "merger" won't have to be fully approved by regulators for CP to strip NS.
IF the shareholders go for it an interim management is set up for NS (one which CP puts in place pending regulator approval). In the interim CP can "acquire" significant parts of NS as the "installed" management sells off assets - a run-through train there, a combined train here, deferred maintenance here (NS), increased maintenance there (CP), eventually a branch line here, a mainline there, a yard consolidation here, a shop there... The longer the approval gets drawn out, the longer the time frame to do that, and if the regulators ultimately say "No" or specify big changes/concessions to enact the full "merger" then CP can just walk away - but keeping some or all of the "acquired"/transferred gains that they saw as the real target (and reason for their takeover).
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Post by atsfan on Dec 10, 2015 9:57:20 GMT -8
Here is the "kicker" with the hostile takeover... IF enough shareholders sell into it, the "merger" won't have to be fully approved by regulators for CP to strip NS. IF the shareholders go for it an interim management is set up for NS (one which CP puts in place pending regulator approval). In the interim CP can "acquire" significant parts of NS as the "installed" management sells off assets - a run-through train there, a combined train here, deferred maintenance here (NS), increased maintenance there (CP), eventually a branch line here, a mainline there, a yard consolidation here, a shop there... The longer the approval gets drawn out, the longer the time frame to do that, and if the regulators ultimately say "No" or specify big changes/concessions to enact the full "merger" then CP can just walk away - but keeping some or all of the "acquired"/transferred gains that they saw as the real target (and reason for their takeover). NS management would have to be incredibly stupid to allow this. I have not heard of as you describe. Can you give an example of where a railroad or airline merger was proposed, all sorts of changes made, was then denied, and the changes remained? |
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Post by fr8kar on Dec 10, 2015 10:30:22 GMT -8
NS management would have to be incredibly stupid to allow this. I have not heard of as you describe. Can you give an example of where a railroad or airline merger was proposed, all sorts of changes made, was then denied, and the changes remained? Southern Pacific Santa Fe. Krebs came from SP to head the new holding company (leading both ATSF and BNSF in the aftermath), the holding company acquired all the non-rail assets and when the merger was denied the holding company sold many of the assets. It's not quite the same as rail properties changing hands and being retained, but it is the situation you describe. |
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Post by curtmc on Dec 10, 2015 18:40:32 GMT -8
Current NS management wouldn't have a say in the matter...
If CP gets enough shares to be majority owner they replace the current NS management with interim NS management (that they - CP - selects).
In case you don't know, that's how hostile takeovers work. That's where the "hostile" comes from - they take over whether the old management wants it or not.
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Post by bnsf971 on Dec 10, 2015 18:48:36 GMT -8
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Post by valenciajim on Dec 10, 2015 20:55:19 GMT -8
NS management would have to be incredibly stupid to allow this. I have not heard of as you describe. Can you give an example of where a railroad or airline merger was proposed, all sorts of changes made, was then denied, and the changes remained? Southern Pacific Santa Fe. Krebs came from SP to head the new holding company (leading both ATSF and BNSF in the aftermath), the holding company acquired all the non-rail assets and when the merger was denied the holding company sold many of the assets. It's not quite the same as rail properties changing hands and being retained, but it is the situation you describe. I am fairly familiar with this transaction. No changes were made to the railroad. There was no integration of the two systems and no rail assets were acquired or disposed of. When the dust settled, SP was a pretty naked railroad company that proved to be an acquisition target for Mr. Anschulz a few years later. The railroad holding company owned a ton of non-rail assets. In fact, SP was the largest land holder in California. The non-right of way land holdings of SP and ATSF were combined into a single company, Catellus, which was spun off to the shareholders. SP also owned a number of other companies which were sold, including TiCor, which was then the largest title insurance company in California. At one time SP also owned Sprint, but I think they sold Sprint prior to the ATSF merger. |
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Post by valenciajim on Dec 10, 2015 21:01:26 GMT -8
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Post by atsfan on Dec 11, 2015 4:39:58 GMT -8
Current NS management wouldn't have a say in the matter... If CP gets enough shares to be majority owner they replace the current NS management with interim NS management (that they - CP - selects). In case you don't know, that's how hostile takeovers work. That's where the "hostile" comes from - they take over whether the old management wants it or not. I know what a hostile Take over is Curt thanks. A huge "if" that CP will be able to obtain 51% of the voting stock and throw out the existing NS board. As I say, NS would have to be stupid to allow this to happen and would indeed have much to say about it before it happened. You didn't give any examples of you saying changes have happened and stuck after the merge failed. I am trying to think of a relevant recent example of a company like NS allowing majority stock take over. Do you have any of those? Thanks |
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