Canadian Pacific Railway Limited announced Monday that exploratory conversations held with CSX Corp. about a possible merger between the two railroads have ended. No further talks are planned.
While no reason was given for ending the talks, CP hinted that regulatory hurdles were a concern.
CP proposed an integrated coast-to-coast combination that it said would improve customer service, promote competition, and alleviate congestion in North America, which is continuing to grow worse.
“While regulatory concerns appear to be a major deterrent for many railroads considering combinations, CP believes that given the right structure between the right players, and having thoughtful considerations and remedies to address shipper concerns, regulatory approvals are achievable,” CP said in a statement.
As of Monday morning CSX had yet to comment on the announcement, but according to the New York Times, it was not warm to the idea of a merger.
In announcing the merger talks were over, CP warned the North American rail industry is being confronted with the challenges of moving more freight than ever. As oil production, crop yields and consumer demand grow alongside the economy, it will only make the situation worse.
“CP is convinced that the significant problems that beset the industry now will only worsen over time if solutions aren't put in place immediately,” the company said. “A pro-competition, customer-friendly, safety-focused railway combination is one such solution that could not be ignored on its merits by regulators.”
Had a merger gone through, it would have created a $60 billion a year company, creating a railroad network with relatively little overlap, according to the New York Times, because Canadian Pacific’s network runs primarily across Canada and into the United States, while CSX’s lines stretch largely along the East Coast.