WASHINGTON — Canadian Pacific wants federal regulators to toss out Canadian National’s request to gain control of Kansas City Southern’s line linking Springfield, Ill., and Kansas City, Mo., as a condition of the CP-KCS merger.
CN’s proposal for divestiture of the line is “without merit,” CP argued in a Jan. 28 filing with the Surface Transportation Board. There is no precedent for forcing a line sale as a condition of an end-to-end merger that does not cause any loss of competition, CP wrote. And there’s no reason to include the potential divestiture in the environmental review of the CP-KCS merger, CP said.
“The review of the CP/KCS transaction — including the extensive environmental review that is well underway — should not be delayed by the highly speculative and contingent divestiture scenario that CN presents,” CP wrote in its filing. “Before there could be any environmental impact arising from CN’s proposed divestiture, CN would first have to convince the Board to mandate a sale of the Line and CP would have to choose CN as the purchaser — contingencies that are highly unlikely to be realized.”
CN told the STB earlier this month that it intended to file a so-called responsive application that would officially request divestiture of the KCS former Gateway Western trackage linking Springfield with Kansas City and East St. Louis, Ill. CN said it would spend $250 million to improve the trackage and tie it to the former Illinois Central Gilman Subdivision to create a new single-line route from Kansas City to Michigan and Eastern Canada.
CP says CN’s divestiture request is its latest effort to “delay or disrupt the CP/KCS transaction.”
CP urged the STB to reject CN’s request that the potential divestiture be included in the ongoing environmental review of the CP-KCS merger. “No purpose would be served by undertaking an environmental review of a CN line purchase that probably will never occur,” CP wrote.
As part of the 1996 merger of Union Pacific and Southern Pacific, CN sought and failed to have the STB force UP to give CN direct access to KCS in Springfield, CP noted.
Predecessor ICG shouldn’t have sold it in the first place.
CN must be reading too many railfan message boards that said the Springfield Line would be abandoned post merger as it didn’t appear to be strategic.
Few people know that KCS is currently in a JV with Jersey County, Illinois to build a large logistics complex, mostly centered on auto parts from Mexico. The State of Illinois is currently expanding US-67 to a 4 lane freeway to reach this complex from the south.
That is why CPKC doth protest. They *have* been investing in the line regardless of what CN tries to say to the STB. CN is getting dangerously close to becoming the Dennis Rodman of railroad regulation. Trying to get in CPKC heads.
Where is this complex being built, and is 67 being 4 laned from the St. Loius area all the was to Jerseyville?
*Way not was*
CN didn’t seek rights in 1996 to Springfield. CN didn’t even own the IC until 1999,
KCS didn’t own Gateway Western until 1997. CP is the distorting facts and information. Review the UP/SP merger document there is no request by there by CN.
Thre may not be a request in the UP/SP merger agreement, but it probably came later in the process when CN asked for the access to KCS. And it was probably trackage rights CN wanted from Chicago to Springfield to the KCS connection, not a line sale to them that CN is asking in this instance.
I don’t think that it’s unreasonable request – access to the Kansas City gateway is significant for UP connections to and from Southern CA, Texas, and Mexico.
Except it’s not a request. CN wants the STB to make divesture of said line a requirement of the merger. Such a requirement would be without merit. However, the business of business is business; how much is CN willing to pay? Is anyone else willing to pay more?
I would also add that UP will not move their interchange with CN from Chicago to KC and short-mileage themselves. They already feed some traffic at Council Bluffs and that’s enough.
CN, you know, that railroad that gobbled up IC, EJ&E, B&LE, British Columbia RR, Algoma Central, and Wisconsin Central is acting like a very sore loser.