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“Thou hast seen nothing yet.”
― Miguel de Cervantes Saavedra, Don Quixote“Railways have a bright future, just not via M&A”— Tony HatchBowing to what seemed the inevitable, E. Hunter Harrison, Bill Ackman and Canadian Pacific on April 11 called off their attempt to merge with Norfolk Southern. Although apparently supported by the investment community, CP halted the effort without a once-expected proxy fight that would have proved that support.
• CP-NS perhaps wasn’t the best test case, given that a huge percentage of the hoped-for benefits came not from consolidation (i.e., it wasn’t the best pairing from a map basis), but from the so-called “Hunterization” of NS!• CP still has opportunities in train productivity, foreign exchange-aided business development, dry powder (with which CP may well buy back some 10 percent or more of its shares).• CP’s white papers are still compelling and in some cases, still valid (see “Precision Railroading” — http://cpconsolidation.com).
• Harrison's legacy — EHH received Progressive Railroading’s 2009 “Railroad Innovator Award,” which is presented annually at RailTrends — is not and never was in any doubt!• NS — and CSX — also have significant post-coal opportunities as restructured assets and improved service lead to growth in intermodal, industrial products and merchandise.Tony Hatch is an independent transportation analyst and consultant, and a program consultant for Progressive Railroading's RailTrends® conference. Email him at email@example.com.