CP to acquire Central Maine & Quebec Railway

[Lenny53]

https://www.marketscreener.com/CANADIAN-PACIFIC-RAILWAY-1409549/news/Canadian-Pacific-Railway-CP-to-acquire-Central-Maine-Quebec-Railway-from-FTAI-29618073/

[learmoia]

The circle of life continues....

~Ian

[Blazeman]

CP Acquires CM&Q Railway

 After the close today, CP announced the tuck-in acquisition of the Central Maine & Quebec Railway (CMQ) from FTAI (covered by Rob Salmon). The CMQ is a Class II railroad operating 481 miles of track in Quebec and Maine. Over the last 12 months, it generated approximately US$40M of freight revenue and operated at around a 90% OR. CP paid US$130M of cash, implying around 25x trailing adjusted EBITDA. We expect the deal to close by year-end.
 
Strategic Rationale. This deal extends CP’s reach further into eastern Canada and the U.S. and provides access to the east coast ports of Searsport, Maine and Saint John, New Brunswick (see map in Exhibit 1). CP previously had no east coast port access, so this deal should lead to some share gains going forward. This is also a contiguous acquisition for CP relative to its existing track, so we suspect CP can quickly improve CMQ’s OR closer to its company average, implying a much lower multiple on forward earnings.

[garethashenden]

So Canadian Pacific has just bought the line they sold 25 years ago? I wonder what changed from their point of view.

[Missaberoad]

So Canadian Pacific has just bought the line they sold 25 years ago? I wonder what changed from their point of view.

Not the first time... The reason CP bought DM&E was to reacquire the former Milwaukee Kansas city line they spun off in the 1990s...

In the late 1980s and 1990s CP was looking to sell everything except its western core system (they were even looking to sell the Soo Line, and everything east of Thunder Bay)

Oil trains, increased intermodal and a number of other factors add to the desire to re acquire and control routes..

[Lenny53]

So Canadian Pacific has just bought the line they sold 25 years ago? I wonder what changed from their point of view.

Quebec has been balking at letting a oil pipeline go through the province.  Can you say ka-ching ka-ching oil train ka-ching.

[C855B]

Still, after what happened at Lac-Mégantic? But I would guess that point is being made by the pipeline interests.

[trainforfun]

A new bypass track around Megantic will be built .

[Lenny53]

A new bypass track around Megantic will be built .

Paid with tax dollars.

[Maletrain]

So it's now "Canadian Atlantic to Pacific".  Can we expect a new logo and paint scheme?  Can we call it "CAt Pac".  Will modelers need new decals and paint colors for 2020? 

[davefoxx]

Is CP the new Borg?  Take over one more road, e.g., KCS (sorry @Philip H), and CP can be Atlantic to Pacific to Gulf of Mexico with routes in three countries. 

[Missaberoad]

Is CP the new Borg?  Take over one more road, e.g., KCS (sorry @Philip H), and CP can be Atlantic to Pacific to Gulf of Mexico with routes in three countries.

I was almost certain that when we bought DM&E the plan was to get KCS... Of course the economy tanked after that and then Hunter/Ackman took over...

[Philip H]

Is CP the new Borg?  Take over one more road, e.g., KCS (sorry @Philip H), and CP can be Atlantic to Pacific to Gulf of Mexico with routes in three countries.

Not likely.  KCS has fended off the real Borg twice in 30 years and CN owns IC.  The only way it would work is if KCS got a controlling stake and the Belle's moved north of the border.

[learmoia]

A new bypass track around Megantic will be built .

.....And CP/DME was going to build a route to the Powder River Basin.......
That was axed as soon as the merger finalized..

Not to say it can't happen......

I'll believe it when I see it..

[trainforfun]

Paid with tax dollars.

Yeah ....