Having dramatically converged to the tumbling price of WTI Crude, Trannies are jumping dramatically after Bloomberg runs the following flashing-red headline:
- *CANADIAN PACIFIC SAID TO EXPLORE TAKEOVER OF NORFOLK SOUTHERN
Amid crashing railcar loadings (down over 23% YoY - worst since the financial crisis), this 'syngery' may make some sense but will likely only mean moar layoffs as "two wrongs do not make a right."
As Bloomberg reports,
Canadian Pacific Railway Ltd., the second-biggest railroad in Canada, is exploring a takeover of U.S. carrier Norfolk Southern Corp. in a fresh attempt to consolidate the North American industry, according to people familiar with the matter.
Canadian Pacific is raising financing and has held early-stage merger talks with Norfolk Southern, which is valued at about $24 billion, said two of the people, who asked not to be identified because deliberations are private. Discussions are preliminary and talks may not progress or lead to a deal, they said.
Representatives for Canadian Pacific and Norfolk declined to comment.
A move for Norfolk Southern, the second-biggest railroad in the eastern U.S., would revive Canadian Pacific’s effort to build a transcontinental carrier after talks with CSX Corp. failed last year. In floating the idea of a CSX tie-up, Canadian Pacific Chief Executive Officer Hunter Harrison upended the long-held view in the industry that it was fruitless to even discuss another merger because regulators would object.
Buy them all...
[6]
This is why they may be considering a merger...
Crude-by-rail is continuing its turn from boom to bust in the third quarter as carloads plunged 23.5% compared with the same quarter a year ago.
U.S. Class I railroads originated 101,167 carloads of crude oil, a number that fell 31,090 carloads from a year ago.
Carloads dropped nearly 9% from the second quarter.
Railroads have seen the business dry up as crude oil prices hover in a territory where it's no longer profitable to use more expensive fracking methods to drill for U.S. oil and then transport it long distances to market.
* * *
But hey unemployment is at 5% so everything must be awesome.
