Is there another major rail merger in the works?

Question

Today it was revealed that billionaire investor Warren Buffet owns a large portion of BNSF. He also reportedly owns two more NA railroads, but isn't saying which. Which other railroads would be a good investment, strictly from a business point of view. What about a merger involving NS or CSX merging with another rail co.? Anyone care to guess what Buffet's other two companies are: Maybe CN Rail?

Answer 1

I think another merger between two huge railroads unlikely.

The mergers of the last twelve or fifteen years have received tacit approval in part because the number of post merger giants still number five. That number does not hint at anything close to monopoly.

But with the theoretical mergers possible, if put into practice would lower that number to three. Following, the remaining two would have an argument for merger for competitive reasons. Now, you have two carriers. This is bad news.

If looking for a railroad investment that may yield much higher returns, buy a freight car and put it into service. It's not impossible. Most folks can secure financing on a $20 thousand dollar automobile. Get five of them together and buy a covered hopper or intermodal flat. Although a high risk investment, that is more secure than a venture into the stock market on the promise of a merger that is unlikely to happen.

As a perfect example, look at the proposed merger between the Southern Pacific and the Santa Fe in the late '70s. Locomotives appeared soon after the announced merger with a yellow and red "war-bonnet" with black paint scheme with the letters SPSF on the side. It was a "done deal."

Then, suddenly, it wasn't. We used to joke that the SPSF stood for, "(S)houldn't have (P)ainted (S)o (F)ast."

Answer 2

For several years the rumors have been flying about east/west railroad mergers. Most of them are that the Union Pacific will merge with the CSX and BNSF will merge with the NS. This would make sense from a transportation network viewpoint as they would be so-called end to end mergers. But who knows what Wall St. or the Feds would think of it.
Oh, IIRC major shareholders have to be listed in reports filed with the SEC, nobody can "secretly own" a publicly traded company.

Answer 3

This question was debated by Trains Magazine some years back. And a lot of you have failed to mention the Candian Railroads (CP Rail & Canadian National) and KCS.

The most probable merger would be BNSF+NS
with the other being UP+CSXT

The main one, Candian Railroad has gobbled up a lot of railroads recenlty and is the main one to watch out for. The have acquired ICRR, DM&IRR, and many more in the past 2-8 years.

Even though KCS may seem small, look at their acquistion/merger with TFM. That opened the gateway into Mexico.

Answer 4

x2 BNSF+NS and UP+CSXT

the problem is that they've been talking about merging for the last... 3 years or more? im not going to give a lecture on the subject but NS has a ton of cash and BNSF looks like the best buy.

also, Warren E. Buffet is the largest share holder of BNSF Railway, 10.9%
doesn't control BNSF.

Answer 5

anti trust laws wont let two major lines like southern or csx merge their will be no fair market on the eastcoast . so what are getting this mixed up info from???????????????????