Is Canadian National Considering a Merger of Its Own?
Written by David C. Lester, Editor-in-Chief
CN Unit Train (Photo by Tim Stevens, Courtesy of CN)
ATLANTA –– The CN webpage devoted to comment about UP+NS leaves one big question unanswered.
The expected reactions occurred after the proposed merger of Union Pacific and Norfolk Southern was announced. The merger is generally opposed by two Class I roads along with shippers, shipper advocacy groups, labor organizations and some rail passenger interests. The opposition of these groups is clearly stated on their websites and in public statements.
Canadian National (CN) also has a web page devoted to the merger, entitled “Keeping Competition On Track.” On this page, CN messages three points: customer voices should be heard; the merger will have far-reaching implications; CN is closely monitoring the case. The webpage provides several links to the Surface Transportation Board website so users can obtain assorted information about the agency and its decisions, and also offers templates for letters if one wants to submit comments or “participate” or offer a “formal pleading.”
Unless I’m missing something, this webpage and the company’s press statements do not indicate whether CN supports or opposes UP+NS. The words “keeping competition on track” in the webpage’s title would lead one to believe that CN is opposed to the merger on anti-competitive grounds, but no one is going to be criticized for promoting competition, so we cannot assume that. Indeed, UP and NS say that their merger would “enhance competition of U.S. freight” by competing “more effectively with Canadian railroads,” along with taking trucks off the road. The CN webpage does tell readers that voicing their concerns can help “shape the conditions imposed on this merger,” but that still doesn’t tell us much.
The relatively “benign” nature of the CN webpage is easily explained if the railroad is considering its own merger. To my knowledge, there have been no reports of CN contacting another railroad or another railroad contacting CN regarding combination. However, if there is back channel communication with CN and another road, CN would look disingenuous, even foolish, if it announced a proposed merger after taking an aggressive stance against UP+NS. Of course, it’s entirely possible that CN has simply chosen not to take a position, but that would be surprising. So, the mystery remains.
Regarding CSX, with the firing of Joe Hinrichs and replacement with Steve Angel, it’s obvious to most observers that CSX is looking for a merger partner. Angel recently said “We’ve received quite a few inquiries on strategic opportunities. We will, of course, pursue anything we believe can create compelling value for our shareholders.” Angel also has significant experience with mergers and acquisitions outside of the rail industry.
So, based on this analysis, a poll of Class I roads regarding whether they support UP+NS would likely yield the following results: Union Pacific–Yes. Norfolk Southern–Yes. CSX–Yes. CPKC–No. BNSF–No. CN-??
Railway Track and Structures has reached out to CN for comment, but has not received a response.
