Facing a freight recession caused by slumping commodity prices and industrial output, No. 1 USA railroad Union Pacific Corp said Thursday hopes of strong economic growth have so far been undermined by a key missing ingredient – the American consumer.
A Canadian Pacific Rail maintenance worker climbs onto a locomotive at the company’s Port Coquitlam yard east of Vancouver, B.C., on Wednesday May 23, 2012. “We oppose this merger and we are prepared to discuss our views with the government”.
The U.S. Justice Department declined to comment on the Canadian Pacific letter and wouldn’t say if it will launch a review. It has insisted that the merger would enhance competition in the railway industry. And with such few players it makes the current situation regarding Canadian Pacific’s unsolicited almost $30 billion offer to acquire Norfolk Southern interesting in that aside from CP, obviously, there does not appear to be a ton of public support for the proposed deal. Indiana Trust & Investment Management Company now owns 4,258 shares of the company’s stock valued at $293,000 after buying an additional 480 shares in the last quarter.
In response, a number of the large (Class I) US railroads appear to have begun a concerted effort to block CP’s proposed acquisition through a widespread campaign of meetings and solicitations with customers, the media, and other interested parties.
Asked whether Union Pacific would participate in consolidation of North America’s seven remaining major railroads, he said, “we will act in the best interests of our shareholders”.
Faced with depressed demand for metal, coal and other commodities, Calgary-based Canadian Pacific responded by furloughing workers and running faster trains. “You’ve got lots of national networks in lots of industries”.
Canadian Pacific, which operates several rail lines in North Dakota, Illinois and Minnesota, has been trying, unsuccessfully, to merge with Norfolk Southern since November.
Canadian Pacific Railway Limited (NYSE:CP) traded up 12.0118% on Tuesday, reaching $117.2428.
This would lead to a “final redrawing” of the continent’s rail map. Moreover, he also noted that an industry merger would “increase the pressure enormously” on other railroads to consolidate, too.
Here’s a breakdown of Canadian Pacific’s fourth-quarter earnings results compared with what analysts had anticipated and its results, in the same period a year ago. The move would give CP access to the valuable markets on the U.S. East Coast, but faces opposition from the target as well as a long list of U.S. lawmakers, rival railways and shippers. CSX might be able to stand alone, but would lose value if it struggled.