In one of the most interesting revelations of the week from Wall Street Journal, Canadian Pacific Railway Limited (USA) (NYSE:CP) is known to approach CSX Corporation (NYSE:CSX) for a potential merger between the two railroad operators.
According to WSJ, Canadian Pacific Railway made the offer last week only to have it rejected by CSX management, although it was not clear whether CP would pursue the deal further. Spokesman for both the North American railroad operators declined to comment over the matter. Canadian Pacific Railway Limited (USA) (NYSE:CP) is ahead of CSX Corporation (NYSE:CSX) in terms of its market value at $32.49 billion as compared to CSX’s $29.93 billion, although the later generates more revenue.
Some of the main obstacles in striking this deal include security concerns from the U.S. national security officials and getting an approval from the U.S. Surface Transportation Board.
The CEO of Canadian Pacific, Keith Creel, said earlier this month that the crude oil shipments would play a key role in the revenue growth of the company through 2018 primarily because of improving oil-loading terminals and tracks in Western Canada. Further, the company released aggressive financial targets of reaching $9 billion in revenues by 2018 along with double EPS by that period. The railroad mover further added that it expects to carry out as many as 200,000 carloads of crude oil during fiscal 2015 as compared to the current 120,000 carloads.
Earlier, Canadian Pacific Railway Limited (USA) (NYSE:CP) reported a significant improvement in its net income during the second quarter 2014 at $371 million as compared with its net income during the same period last year at $252 million. Its revenue grew by 12% during the quarter to $1.68 billion along with an operating ratio of 65.1%.
This article has been written by Prakash Pandey.