RAIL BARON IN FULL SCALE.

A month ago, Canadian Pacific proposed to merge with Kansas City Southern, creating a railroad company serving the Atlantic, Pacific, and Gulf coasts with trackage in Canada, the States, and Mexico.  The company name would be Canadian Pacific Kansas City.  (Why not Montreal, Mexico City and Pacific or Kansas City Mexico and Orient?)  The proposal contains the predictable corporate spin, e.g. "participate in the realization of synergies."  The point is to take advantage of the new trade protocols under the U.S. - Mexico - Canada pact that recently took effect.

The other Canadian carrier, which currently serves the Atlantic, Pacific, and Gulf coasts with trackage in Canada and the States and still trades under its socialist name, Canadian National, counter-tendered.  See you in court, say CPR. "[Canadian Pacific] also said that a CN-KCS combination would diminish competition between the Midwest and Gulf Coast by putting the parallel KCS and former Illinois Central routes under CN control."  That's right, dear reader, the railroad that currently operates the most trackage in Wisconsin and in Mississippi is CNR.

Shades of the Conrail feeding frenzy.  Here's Trains analyst Bill Stephens.

Canadian Pacific today finds itself in the same uncomfortable – and threatened – position that Norfolk Southern was in 25 years ago.

Back in October 1996, CSX Transportation utterly shocked NS when it announced it had a deal to acquire Conrail. The $8.1 billion merger would give CSX access to the New York market and in the process relegate NS to the status of an Eastern regional railroad.

Last month in a blockbuster $29 billion deal, CP announced it would acquire Kansas City Southern to create the first railroad linking Canada, the U.S., and Mexico. This would give CP a network that would nearly mirror that of larger rival Canadian National, but with access deep into the major consuming and manufacturing regions of Mexico.

Then along comes CN this week with its stunning and unsolicited $33.7 billion bid for KCS. All of a sudden CP could go from a more potent competitor for CN to an also-ran. CN+KCS would become the third largest Class I railroad in North America, making CP by far the smallest fish in the pond.

What this means, of course, is that the stakes are as high today for CP as they were for NS back in 1996. CP simply cannot let KCS fall into the hands of its larger rival.

We still haven't heard from the four major U.S. carriers.