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Canadian Pacific confirms CSX merger talks are dead


Canadian Pacific Railway (TSE:CP) (NYSE:CP) confirmed Monday that talks about a possible merger with CSX Corp (NYSE:CSX) have ended, and that no further discussions are planned.

The Canadian railway operator did not give a specific reason for the termination of the talks, but did say that regulatory concerns appear to be a major deterrent for many railroads considering combinations.

It also noted, however, that it believes that given the right structure between the right players, and "thoughtful considerations and remedies to address shipper concerns", regulatory approvals are achievable.

Reports about a possible merger between CSX and CP surfaced last week, but both railroads declined to comment further. 

CP said Monday that it proposed an integrated coast-to-coast combination that would improve customer service, promote competition, alleviate congestion in North America -- specifically the Chicago gateway -- and generate shareholder value.

"The North American rail industry is confronted today with the challenges of moving more freight than ever and the prospect of moving even more as oil production, crop yields and consumer demand grow alongside the economy," Canadian Pacific said in its statement.

"CP is convinced that the significant problems that beset the industry now will only worsen over time if solutions aren't put in place immediately. A pro-competition, customer-friendly, safety-focused railway combination is one such solution that could not be ignored on its merits by regulators."

CSX operates more than 21,000 miles of track in 23 Eastern states and two Canadian provinces. CP is a transcontinental railway in Canada and the United States with direct links to eight major ports, including Vancouver and Montreal. 

CP said its CEO Hunter Harrison will discuss railroad mergers and acquisitions further in a conference call tomorrow afternoon. Shares in Toronto fell over 1 percent to C$222.60 as of 9:40am ET. 

Quick facts: Canadian Pacific Railway

Price: 357.47 CAD

Market: TSX
Market Cap: $48.48 billion

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