NS to be Taken Over by CP?

[Saturnalia]

What concerns me the most about this whole story is what's next for the other Class I mergers to stay competitive. Also, the "open source" railroading sounds like it could remove the boundaries of railroad interchanges as we know it. I'm curious if this will endanger more trackage in Michigan that the Class Is have still held onto, especially the lines across the state such as the NS, CN, and especially CSX trackage.

The GTW Mainline isn't going anywhere, since it is a direct Chicago-Toronto link.

The CSX trackage is all branchlines anyways...won't go anywhere, regardless of who gets it. Only major change would be a CP-CSX merger, since then *maybe* they'd stop running traffic on the B&O and come back to the PM.

And NS...well that's all Detroit stuff and won't go anywhere.

I don't think that we'd see any meaningful line reductions in Michigan. Everything will basically continue to exist as long as on-line traffic remains - unlike the otherwise barren coal routes like the Clinchfield and Virginian.

[Ypsi]

You win. You're 100% correct. CP is going to go back to Calgary and forget about NS. They'll sip their hot cocoa, eat their Canadian Bacon, and Chalk it up as "oh well we tried".

You obviously don't understand the money and egos involved if you think this is over...

So noting that your statement is speculation is incorrect? Did I claim to have an answer at all? I provided my opinion on the matter, and pointed out that your statement is also speculation. True or not it's speculation. I didn't deny or vertify what you said just called it as it saw it. And I never said its over either did I.. But you can not deny that you backed up your own speculation with someone else's speculation.

[ConrailMan5]

I'm saying that the business men and women involved are very smart people. I haven't talked to any of them nor Ackmen. (Yes I know who he is) but it would appear that someone here has. I know that isn't me. And I am not going to pretend I know the motivations behind the merger nor will I pass it off as fact. While yes Ackmen is a smart cookie, the men and women whose money is on the line aren't going to go through with something that they don't believe in. They may not be happy with the boards decision or actions with regards to the merger, but if it really was as imminent and doomsday as some seem to believe, then why would the board of directors hold course? They have jobs at stake here too. I am not commenting on the relative conditions of NS or the merits of Ackmen of the merits of the merger. Quite frankly I don't have any sort of metric at my disposal for objectively reviewing NS's success/failure over the past couple of years. Nor do I quite frankly give a hoot about heritage units or tea kettles (I do see their marketing value). Look at the motivations behind the actions. A hostile takeover isn't the only place to get to merger from here. When the merger was announced, the stock prices of both companies increased relatively significantly. And that was a "unreasonable offer". Now if NS's board continues to hold course they may get a better offer.

Despite what you all may think, community matters in business, not just the money. Based on the chatter from CP, they want to cut NS's system down significantly. This is going to result in a loss of many jobs. That hurts communities, customers, and employees. You could be looking at decreased morale and lower productivity initially because of that.

[Saturnalia]

Despite what you all may think, community matters in business, not just the money.

I think you're vastly over-estimating the amount of humanity in the decisions of money-movers on Wall St. They see untapped potential and are willing to throw billions around to turn that into more billions. They don't give a fig for the yardmaster of _____ yard or the local C&E pool.

The 40% of NS' shareholders is probably based on other investment firms which hold NS shares. The ma and pa style holders don't mean much - the big swing will likely come from investment firms/hedge funds which own hundreds of thousands or even millions of shared.

[CSX_CO]

It's the NS management that says it's an unreasonable offer. The shareholders want a vote. NS must be uncertain of that outcome, or know they'll lose, and aren't putting it to a vote.

CP lowering their bid is calculated. The shareholders see NS rejecting the bids without consulting the shareholders, and each time they come back the offer is lower. Not a good idea to make your shareholders antsy when they control your future.

Framework is set for a hostile takeover. NS doesn't have the money to fight a proxy battle, and the more they ignore their shareholders, the more angry they might get.

[Saturnalia]

"Jim Squires Turns into Toast"

http://cs.trains.com/trn/b/fred-frailey ... toast.aspx

[ConrailMan5]

Despite what you all may think, community matters in business, not just the money.

I think you're vastly over-estimating the amount of humanity in the decisions of money-movers on Wall St. They see untapped potential and are willing to throw billions around to turn that into more billions. They don't give a fig for the yardmaster of _____ yard or the local C&E pool.

The 40% of NS' shareholders is probably based on other investment firms which hold NS shares. The ma and pa style holders don't mean much - the big swing will likely come from investment firms/hedge funds which own hundreds of thousands or even millions of shared.

What I'm saying here is if it's all about the money, the company may fail. Plenty of instances in history where money and power resulted in the collapse of a company (Penn Central) where as keeping a good ethical compass and keeping the status quo under new ownership allowed a company to flourish (Milwaukee+Soo line) even though the money was less than alternative choices for shareholders. Milwaukee-Soo is not a direct comparison mind you, but it serves the point.
Also, you need good morale and leaders who have aligning views for a merger like this to take place. If thw leaders do not agree you are never going to get anything done. If you rush things, you are going to miss things and that will cost you greatly down the road. This merger battle is happening very rapidly in the grad scheme of things. Take the mergers of the 1970's. Perhaps the most successful was the BN merger. The management teams of those companies spent years planning that, making for good corporate culture. That translated into relative success. I personally like how the NS management is handling this. They are looking down the road and saying "hey the money is ok (they say inadequate to appease the shareholders) but what about down the road? What challenges will we face. CP on the other hand is pushing the financial gains hard, has a grand plan to execte, but I have not seen much concern for consequences and problems with their proposal. As the CP response went, they say they leveraged the risks of the STB approval/ issues with the merger process by increasing the net value of their offer. This, in all actuality, did nothing to the risk involved in the merger. All
It did was put a nice cash pile in front of the shareholders to distract them. But that is just my .02 and analysis. I have no sources to support. And will not attempt to pass my opinion (key word here) off as fact.
Whatever the alleged rumblings that some here have reported about shareholders and a proxy battle I cannot find a single objective source to confirm that, one that is a report and not speculation. CP is going to be showing that they have support and NS going to report opposition. The reality of the situation is going to fall somewhere in between. The only way to see reality is to look, without bias, at what is really being said by both sides. But, like I said. We don't really have that. We have the polished pieces of propaganda each side is allowing to be heard.

[CSX_CO]

I guess Ackmans take over of CP (amongst his other acquisitions) by using a proxy battle to take control, isn't a good indication of how Ackam operates?

[ConrailMan5]

I guess Ackmans take over of CP (amongst his other acquisitions) by using a proxy battle to take control, isn't a good indication of how Ackam operates?

Again, has happened in the past, does not mean it will happen here. Using the past to predict the future is a bad bet. Using the past to avoid mistakes in the future is another thing. And again, there are more than one ways to skin a cat. Keep an open mind.

[CSX_CO]

I guess Ackmans take over of CP (amongst his other acquisitions) by using a proxy battle to take control, isn't a good indication of how Ackam operates?

Again, has happened in the past, does not mean it will happen here. Using the past to predict the future is a bad bet. Using the past to avoid mistakes in the future is another thing. And again, there are more than one ways to skin a cat. Keep an open mind.

You really don't understand how corporate raiders work....

These guys have a calculated method to their "madness". They don't act on "whims" so past behavior is most certainly an indication on how they will act. Did you read Fraileys column? What they're doing is exactly how they took control of CP. Ackman has done the same thing with his other acquisitions.

But you're right, they're liable to back away at any minute and try another unproven approach...

[Saturnalia]

I wholeheartedly disagree with your assessment, CRman5. Not only was the argument creatively walked-back, I still disagree that somehow corporate money-power players are humanitarian.

First:

Despite what you all may think, community matters in business, not just the money. Based on the chatter from CP, they want to cut NS's system down significantly. This is going to result in a loss of many jobs. That hurts communities, customers, and employees. You could be looking at decreased morale and lower productivity initially because of that.

My reply:

I think you're vastly over-estimating the amount of humanity in the decisions of money-movers on Wall St. They see untapped potential and are willing to throw billions around to turn that into more billions. They don't give a fig for the yardmaster of _____ yard or the local C&E pool.

And your rebuttal, diverging from the humanitarian line to tow the corporate placeholder ladder.

Also, you need good morale and leaders who have aligning views for a merger like this to take place. If thw leaders do not agree you are never going to get anything done.

That's to say, in a proxy battle situation, Ackman and Co doesn't give a second thought to employees, especially at the lower levels. It's a SHAREHOLDER RETURN game, and no more. Yes, there have been some more humanitarian businesses in the past, but this is not that case.

Under a takevoer outcome, you can bet that the NS ranks will be swiftly cleaned of dissent and replaced with pro-Ackman and pro-Harrison personnel. This is not a normal merger we're considering here. Key word: HOSTILE.

----------
Now, that's under hostile conditions. And I'm not saying your argument (speculation) is truly wrong per se, just that I disagree, and here is my counter-argument. It's all speculation anyways...just remember that it's weighing things and not a factual argument.

[ConrailMan5]

I wholeheartedly disagree with your assessment, CRman5. Not only was the argument creatively walked-back, I still disagree that somehow corporate money-power players are humanitarian.

First:

Despite what you all may think, community matters in business, not just the money. Based on the chatter from CP, they want to cut NS's system down significantly. This is going to result in a loss of many jobs. That hurts communities, customers, and employees. You could be looking at decreased morale and lower productivity initially because of that.

My reply:

I think you're vastly over-estimating the amount of humanity in the decisions of money-movers on Wall St. They see untapped potential and are willing to throw billions around to turn that into more billions. They don't give a fig for the yardmaster of _____ yard or the local C&E pool.

And your rebuttal, diverging from the humanitarian line to tow the corporate placeholder ladder.

Also, you need good morale and leaders who have aligning views for a merger like this to take place. If thw leaders do not agree you are never going to get anything done.

That's to say, in a proxy battle situation, Ackman and Co doesn't give a second thought to employees, especially at the lower levels. It's a SHAREHOLDER RETURN game, and no more. Yes, there have been some more humanitarian businesses in the past, but this is not that case.

Under a takevoer outcome, you can bet that the NS ranks will be swiftly cleaned of dissent and replaced with pro-Ackman and pro-Harrison personnel. This is not a normal merger we're considering here. Key word: HOSTILE.

----------
Now, that's under hostile conditions. And I'm not saying your argument (speculation) is truly wrong per se, just that I disagree, and here is my counter-argument. It's all speculation anyways...just remember that it's weighing things and not a factual argument.

never passed my point off as truth. all just speculation. Also one of my points here.

Let me hit your rebuttle of my rebuttle. I am tring to see this from all angles and not look at it from one point of view. In my "humanitarian" (your words not mine, Generally dont use that term when describing human relations) point I am discussing how to get support, top down and in the public view of a merger. If you disagree, I am not going to argue with you. Just a difference of opinions. I am going to make a case for my opinion. And your selective quoting left out my examples of prior mergers, both good and bad. Penn Central, for instance, did not do enough to win over the "yardmasters and C&E men". AS such, they ended up making a huge mistake in a settlement, which helped to bleed the company to death. Why did they make that arrangement? To gain support for the merger. It was a swift decision that bit them later. IN my positive example with BN, they spent years preparing for merger with good coorperate culture. This worked top-down, and helped them avoid issues that PC faced in their merger.
I should have expanded on my point a little more I will admit, so I can see where you got the idea that I was avoiding your original question. In the Milwaukee-Soo merger, some of the competition (namely CNW) planned to abandon a majority of that acqusition. Soo, on the other hand, went after it with a minimal abandonment approach. This won favor with communities, employees, and the public. It also maintained the balence of competition in the midwest. While that is not an issue in the CP-NS merger, the other three areas can become issues if you do not take adequate time to adress them. It is not so much a "humanitarian" effort when I say that the needs of the public and the rank and file need to be weighed, but one that actually has real monetary costs. Afterall, Jim squires doesnt make cuts, block cars, make sure they get to their destination in a timely manner. All of those things fall to the rank and file. If the rank and file isnt happy, it can cost the company money. If shippers arent happy with the service, they can go elsewhere especially in the eastern US. Unlike in the long-haul world of canada, NS faces stiff competition from trucks. While there are many captive shippers, the cost of service is not as great when you choose between truck or train on a short distance.

[MSchwiebert]

Keep in mind that the Penn Central merger was in the planning stage for 10+ years before initiated. Also, Burlington Northern in some respects is not a valid example because there were prior attempts to merge the carriers that became the BN (4 of them in fact, in 1896, 1901, 1927 and 1955) so it was more of an inevitability than anything. As for Milwaukee/Soo, If I recall correctly that was a bankruptcy sale not a merger. While in most instances of bankruptcy sales, the highest bid is taken (to better make bondholders whole etc.) the Soo bid was not the highest.
Having been through an unwanted (and ultimately unsuccessful) merger attempt earlier in my career, I can say that caring about "corporate culture" is just as much of a myth as "merger of equals". There will be a "winning team" and a "losing team" that's just human nature. It may be that the CP/Harrison proposal doesn't come to pass, but in light of an anemic economy suppressing return on the investment of the large institutional stockholders - it's way too soon to say.

[Notch 8]

CP is at it again and says they will go to the Stockholders to get this deal done... CP will gut NS if this deal goes through !
Hopefully the objections of the other RR's will kill such a takeover effort..

[CSX_CO]

CP is at it again and says they will go to the Stockholders to get this deal done... CP will gut NS if this deal goes through !
Hopefully the objections of the other RR's will kill such a takeover effort..

Nothing the other RR's can do if Ackman goes to the shareholders, UNTIL they try and merge the companies. Don't merge them on paper, only people who can stop it are the NS shareholders.

[NSSD70ACe]

Something else to think about, and please keep in mind that I don't know much, but I feel like it's pretty darn peculiar that CP is so desperate to merge with Another company? I mean, I know that the real estate is a big plus but it makes me wonder what other reasons CP might have to so desparately merge. Internal issues?


Keep in mind I know very little about this sort of operation.

EDIT: I'm also curious about why CSX didn't get this kind of treatment from CP?

[CSX_CO]

CSX fought back and started making the changes Harrision would have.

Sounds like Ackman this morning has thrown the gauntlet, challenging the NS managements ability to lead the company. Sounds like all that "speculation" came true after all....

[ConrailMan5]

CSX fought back and started making the changes Harrision would have.

Sounds like Ackman this morning has thrown the gauntlet, challenging the NS managements ability to lead the company. Sounds like all that "speculation" came true after all....

Sounds more like propaganda to me. Of course akman will challenge the leadership. He isn't getting his way.
And again, sources are a nice thing when you throw out "information"

Not that I doubt you, I just like to have substance to things. Otherwise they might as well be speculation and opinion.

[bdconrail29]

Agreed. I don't think anyone ever doubted that Ackman would challenge the ability of NS's management/leadership.

These threads always turn into a "see I told you so" discussion and becomes more about "winning." Just like the PTC deadline that people doggedly argued would never be granted and well...

Speculation often times does become true because the basis is well-founded and the speculation is very educated. I do think we will see some serious challenges to NS by CP and I do think CP will attempt everything they can. There are still a lot of ifs and assumptions right now, but that may very well change and probably will change.

[CSX_CO]

CSX fought back and started making the changes Harrision would have.

Sounds like Ackman this morning has thrown the gauntlet, challenging the NS managements ability to lead the company. Sounds like all that "speculation" came true after all....

Sounds more like propaganda to me. Of course akman will challenge the leadership. He isn't getting his way.
And again, sources are a nice thing when you throw out "information"

Not that I doubt you, I just like to have substance to things. Otherwise they might as well be speculation and opinion.

He's following his script to the letter. Everything that has been "speculated" is coming true. This is exactly how he does things.