CN1Q2021: ‘High Degree of Confidence’ (UPDATED)
CN’s first-quarter 2021 results included “an industry-leading increase in traffic volume of 5% year-over-year.”
CN’s first-quarter 2021 results included “an industry-leading increase in traffic volume of 5% year-over-year.”
The letters keep coming: Railway Age has obtained a letter Canadian Pacific President and CEO Keith Creel sent to his counterpart at Kansas City Southern, Pat Ottensmeyer, pointing out in detail “the dimensions of competition between KCS and CN.”
The merger dance that has been conducted since March 21 has morphed from the Waltz to the Mambo in “The Dance at the Gym” scene in “West Side Story” to the Twist.
A Cowen and Company “snap” railroad shipper survey conducted over a one-day period indicates that CN “is likely to have a more difficult time with shippers supporting its proposed acquisition of Kansas City Southern. This compares to a more favorable view by shippers of Canadian Pacific acquiring KCS in our most recent survey.”
A bidding war has broken out for the Kansas City Southern, but it’s actually more like a chess game. Here are some observations about what it all could mean, especially in terms of railroad “real estate,” from my economist observation post.
Just when we thought Railway Age would get a brief break from publishing letters about mergers, here’s another one, from the North Dakota Grain Dealers Association (NDGDA) to the Surface Transportation Board re-iterating its support of the Canadian Pacific-Kansas City Southern combination.
Letters, Kansas City Southern gets letters. CN President and CEO JJ Ruest has responded to Canadian Pacific President and CEO Keith Creel’s April 21 letter to KCS President and CEO Pat Ottensmeyer
“The strong demand environment, particularly across bulk, merchandise and domestic intermodal, coupled with our commitment to the foundations of Precision Scheduled Railroading enabled our success in the first quarter,” Canadian Pacific (CP) President and CEO Keith Creel reported during the merger-bound railroad’s earnings announcement.
CN on April 21 submitted to the U.S. Surface Transportation Board a prefiling notification of its intent to file an application seeking authority to combine with Kansas City Southern “further to CN’s superior proposal for a cash-and-stock transaction valued at $33.7 billion, or $325 per share.”
Perhaps not so surprisingly, almost exactly one month to the day after Canadian Pacific and Kansas City Southern announced their intent to merge into CPKC (Canadian Pacific Kansas City), CN made a counter-offer it said is a “superior proposal” that “will result in a safer, faster, cleaner and stronger railway.” CN’s proposal of $325 per KCS share “represents a 21% premium over the implied value of the CP transaction and values KCS at an enterprise value of $33.7 billion.”