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Dow Transports Jump On Canadian Pacific-Norfolk Southern Merger 'News'

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...

 

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.