BNSF to compete with Canadian Pacific for Norfolk Southern?

Matt Rose, executive chairman of the Warren Buffet-owned railway, says he does not think the industry needs major rail mergers at this point, but that “if there is consolidation to be had, we would participate.”    Matt Rose, executive chairman of BNSF Railway, has indicated his company might make a competing bid for Norfolk Southern, which Canadian Pacific Railway is seeking to acquire, according to a report from Bloomberg news service.
   Rose told Bloomberg in an interview, “If there is consolidation to be had, we would participate as well.”
   The BNSF executive made his remarks of Thursday after Canadian Pacific director and activist investor Bill Ackman indicated Canadian Pacific might engage in a proxy fight for control of Norfolk Southern.
   Earlier this week Norfolk Southern rejected CP’s revised bid to purchase it for $30 billion – $32.86 in cash and 0.451 shares in a new holding company that would own both Class I railways.
   Rose told Bloomberg he does not favor more mergers among North American railroads, but said Thursday that the company won’t sit on the sidelines if new deals are made.
   According to a story in the Financial Times, “Rose’s statement appeared to be a warning to the Surface Transportation Board, which would have to approve any merger, that other railroads would also expect to be allowed to merge if the CP-NS deal went ahead, further disrupting the industry.”
   There are only seven major class one railroads in North America – Norfolk Southern and CSX in the eastern U.S., BNSF and Union Pacific in the West, the two Canadian railroads, Canadian Pacific and Canadian National, which are both transcontinental railroads with trackage into the U.S., and Kansas City Southern, whose network in the Midwest extends far into Mexico.
    Rose told Bloomberg he thought further consolidation of the large railroads would only come if one of the railroads had financial problems or “due to population growth and the economy that we needed a significantly larger amount of railroad capacity, which we think would be a benefit of a consolidation.”
   “We’re not at that point,” he said.