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New releases continue CP, CN efforts to gain support for KCS merger bids

By | May 3, 2021

CP highlights letters opposing CN's bid, while CN appeals to the "Kansas City Southern family"

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Logos for Canadian National, Canadian Pacific, and Kansas City Southern

ILogos for Canadian National, Canadian Pacific, and Kansas City Southernn Monday morning’s latest installment in the regulatory and public-relations efforts to boost their respective bids for Kansas City Southern, Canadian Pacific and Canadian National have each issued new press release. CP’s cites what it terms “mounting opposition” to the CN-KCS merger proposal, while CN has released an open letter to “the Kansas City Southern community” to explain why its bid for KCS is superior to the Canadian Pacific offer.

In its release, Canadian Pacific reports that more than 110 letters have been filed with the Surface Transportation Board from customers and other interested parties expressing concern or opposition to the CN offer, quoting as examples comments from the North Dakota Grain Dealers Association and Premier of New Brunswick, Blaine M. Higgs, among others. The release says almost 500 letters have been filed with the STB supporting its bid for KCS. Canadian National, in a release last week, said its offer had received more than 600 letters of support.

CN was first out of the blocks on Monday, with a release of its letter noting it is “in a spirited contest with Canadian Pacific to acquire Kansas City Southern.” Among the six bullet points offered in the letter, signed by CEO JJ Ruest and Chief Operating Officer Rob Reilly, to support the contention that it is making a superior offer for KCS, CN sites additional connections its merger would create (22 Class I gateways, five ports, and 10 barge terminals); that north-south competition would remain in the form of six other routes operated by Class I railroads, along with barge and truck traffic; and that it will address competitive concerns over what it says is the 1% of the combined network where CN and KCS overlap. CP continues to argue that the overlap is much broader [see “CP says broad CN overlap with KCS system poses regulatory hurdle,” Trains News Wire, April 26, 2021].

3 thoughts on “New releases continue CP, CN efforts to gain support for KCS merger bids

  1. The overlap is clearly much broader than 1% and the “new” rules require a merger increase competition, rather than just preserving it. It seems unlikely the STB would approve a CN/KCS merger without conditions far beyond letting someone else serve the 1%. I am not 100% against CN/KCS, but CN needs to get serious about promoting competition if they expect STB approval.

  2. I’m sure the “1% overlap” figure is obtained by using total route-miles, including CN’s Canadian trackage, which would be irrelevant in a comparison of stateside trackage, especially considering CP’s overlap with KCS is 0.00%.

  3. The CP route betweeen Minneapolis and Kanas City is over 100 miles longer than UP. The KCS route between Kansas City and Laredo is probably 200 miles longer than UP. I may be understating the problem depending on whether congestion in Fort Worth is greater than in Houston. The CN merger makes even less sense.

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