A few days after throwing in the towel on its attempted merger with Kansas City Southern, and facing a board and management reorganization forced by activist investor and “beneficial owner” TCI Fund Management Ltd., CN on Sept. 17 announced its “Full Speed Ahead – Redefining Railroading” initiative, which it describes as an “ambitious value creation plan” consisting of, for full-year 2022, $5 billion in stock buybacks (a previously authorized C$1.1 billion of it to be completed by the end of January 2022), a decrease in capital investment to approximately 17% of revenues, C$700 million of additional, incremental operating income, a 57% operating ratio, and elimination of more than 1,000 jobs, 400 of them from operating crafts.
Well, this one’s on the STB. What to do in the face of the STB’s decision about the voting trust sought by CN in which CN would have gained control of the Kansas City Southern? That avenue has been foreclosed by the Board’s recent decision to reject the voting trust.
The fallout from CN’s Surface Transportation Board-forced scuttling of its attempt to merge with Kansas City Southern grew from shrapnel to a ground-zero blast the day after Canadian Pacific and KCS rekindled
Get used to the acronym “CPKC,” which stands for Canadian Pacific Kansas City, the name of the Class I railroad that will begin operations sometime within the next 18 to 24 months, provided the Surface Transportation Board approves—as many industry observers and analysts believe it will—the merger of the Canadian Pacific and the Kansas City Southern. The two railroads have circled back to pretty much the original merger agreement they announced on March 21, 2021, one month before CN began its attempt to wrest the deal away from CP with a higher bid.
RAILWAY AGE, FINANCIAL EDGE, SEPTEMBER 2021 ISSUE: For investors, industry watchers and rail consumers, August was either the most interesting or frustrating month to date in the reality dating show, “I Want to Buy a Class I Railroad.”
All CN employees in Canada are required to be vaccinated against COVID-19 as of Nov. 1, the Class I railroad reported on Sept. 8.
The Surface Transportation Board (STB) has found five of the seven U.S. Class I railroads to be revenue adequate for 2020: BNSF, CSX, Kansas City Southern, Soo Line (the U.S. affiliate of Canadian Pacific) and Union Pacific.
The Port of New Orleans’ (Port NOLA) Napoleon Avenue Container Terminal is resuming service Sept. 7, following the Port’s restoration of limited cargo and vessel operations beginning Sept. 2—just four days after Hurricane Ida made landfall in southeast Louisiana as a category 4 storm.
There’s an 800-pound British gorilla pounding on the door of CN’s boardroom. He’s pissed, beating his chest, and licking his chops. He’s not going away until he cleans house. He’s Sir Chris Hohn, and the activist hedge fund he leads, TCI Fund Management Ltd., on Aug. 30 became a “beneficial owner” of CN, grabbing 5.2% of the railroad’s shares, putting Hohn and his business partner, Ben Walker, in a position to make CN an offer it probably can’t refuse.
UPDATED SEPT. 3, 2021: The United States Surface Transportation Board—as expected by many industry observers and financial analysts—on Aug. 31, 2021, by unanimous vote, rejected the CN-Kansas City Southern voting trust, effectively killing the merger, and opening the door for Canadian Pacific to re-engage with KCS on the CPKC (“Canadian Pacific Kansas City”) deal it struck with KCS on March 21, albeit with a sweetened offer. KCS postponed its Sept. 3 shareholder meeting to vote on the CN offer until 9 a.m. (CT) on Sept. 24. It is now “evaluating its options,” which includes considering CP’s offer.