• Advertise
  • Contact Us
  • About Us
  • Supplier Directory
  • SCB YouTube
  • Login
  • Subscribe
  • Logout
  • My Profile
  • LOGISTICS
    • Air Cargo
    • All Logistics
    • Express/Small Shipments
    • Facility Location Planning
    • Freight Forwarding/Customs Brokerage
    • Global Gateways
    • Global Logistics
    • Last Mile Delivery
    • Logistics Outsourcing
    • LTL/Truckload Services
    • Ocean Transportation
    • Rail & Intermodal
    • Reverse Logistics
    • Service Parts Management
    • Transportation & Distribution
  • TECHNOLOGY
    • All Technology
    • Artificial Intelligence
    • Cloud & On-Demand Systems
    • Data Management (Big Data/IoT/Blockchain)
    • ERP & Enterprise Systems
    • Forecasting & Demand Planning
    • Global Trade Management
    • Inventory Planning/ Optimization
    • Product Lifecycle Management
    • Sales & Operations Planning
    • SC Finance & Revenue Management
    • SC Planning & Optimization
    • Sourcing/Procurement/SRM
    • Supply Chain Visibility
    • Transportation Management
  • GENERAL SCM
    • Business Strategy Alignment
    • Education & Professional Development
    • Global Supply Chain Management
    • Global Trade & Economics
    • HR & Labor Management
    • Quality & Metrics
    • Regulation & Compliance
    • SC Security & Risk Mgmt
    • Supply Chains in Crisis
    • Sustainability & Corporate Social Responsibility
  • WAREHOUSING
    • All Warehouse Services
    • Conveyors & Sortation
    • Lift Trucks & AGVs
    • Order Fulfillment
    • Packaging
    • RFID, Barcode, Mobility & Voice
    • Robotics
    • Warehouse Management Systems
  • INDUSTRIES
    • Aerospace & Defense
    • Apparel
    • Automotive
    • Chemicals & Energy
    • Consumer Packaged Goods
    • E-Commerce/Omni-Channel
    • Food & Beverage
    • Healthcare
    • High-Tech/Electronics
    • Industrial Manufacturing
    • Pharmaceutical/Biotech
    • Retail
  • THINK TANK
  • WEBINARS
    • On-Demand Webinars
    • Upcoming Webinars
  • PODCASTS
  • VIDEOS
  • WHITEPAPERS
Home » Century-Old Rail Rivalry Flares Up Over a $30 Billion Prize

Century-Old Rail Rivalry Flares Up Over a $30 Billion Prize

Canadian National Railway
Image: Bloomberg
April 21, 2021
Bloomberg

Canadian National Railway Co.’s bid to wrest Kansas City Southern away from Canadian Pacific Railway Ltd. is rekindling a century-old rivalry and pitting former colleagues against each other.

The $30 billion takeover fight sees Canadian National Chief Executive Officer Jean-Jacques Ruest attempting to grab a prize long sought by Canadian Pacific CEO Keith Creel, who once served alongside him as Canadian National’s chief operating officer. It’s one of the biggest railway deals of the past two decades, with the winner gaining control of a sprawling network that crosses the three countries in North America’s trade alliance.

The two sides took shots at each other after Canadian National unveiled an unsolicited bid that’s nearly 20% higher than Canadian Pacific’s offer.

Canadian National is “the better bid, the better partner, the better railway,” Ruest said on a conference call with analysts. “The result will be a safer, faster, cleaner and stronger railway than any other proposed combination for KCS.”

Canadian Pacific said its larger rival’s offer is “illusory and inferior” because it creates major antitrust concerns. “The Canadian National management team has significantly underperformed over a decade and has a track record of underdelivering against its own projections,” Canadian Pacific said in a statement that also attacked CN’s safety record.

The rivalry between Canada’s two dominant railways has been hot ever since Bill Ackman’s Pershing Square Capital Management LP won a proxy fight in 2012 for control of Canadian Pacific’s board.

Ackman installed Hunter Harrison, who had gained acclaim for turning around Canadian National while he led the company from 2003 to 2009, as CEO. Harrison then poached Creel.

The companies have fought publicly and sued each other; Canadian Pacific even paid C$25 million ($19.8 million) to settle a claim that accused it of using former Canadian National employees and client lists to take CN’s customers. But this time, the stakes are much higher.

“It’s a real escalation of this century-old corporate rivalry,” Dimitry Anastakis, a professor at the University of Toronto’s Rotman School of Management, said in an interview. “It really does change the dynamic for both companies whether they get it or not, and it can be a game-changer.”

The balance of the Canadian rail system is also at stake. Canadian Pacific is trying to match its larger rival’s reach into the U.S. and even go one up by tapping into Mexico. If Canadian National wins the bidding, it would isolate Canadian Pacific to mostly its home country, while swelling its U.S. business and extending its reach to one of the largest ports in southern Mexico.

‘Betraying’ CN

Canadian Pacific’s hiring of Harrison sparked a legal battle over C$40 million in retirement benefits he was owed by Canadian National. It was settled when Harrison agreed not to hire about 60 of Canadian National’s top executives for more than three years.

That deal cleared the way for Canadian Pacific’s hiring of Creel in 2013. It ultimately opened a path to the top for Ruest, who became interim CEO in March 2018 and took the job on a permanent basis four months later.

But the bad blood continued to simmer under Harrison’s reign at Canadian Pacific, and in 2016 it paid to settle the suit over customer-poaching.

“It was seen within as CN that Hunter was betraying CN,” Karl Moore, a management professor at McGill University in Montreal, said in an interview. “We don’t do this in Canada.”

Ackman sold his Canadian Pacific stake in 2016 and left the board. Harrison departed soon after and took over as CEO of CSX Corp., but died in December 2017 at age 73.

While the Ackman-Harrison episode marked the most pitched battle between the companies in recent memory, the two enterprises have been competing for more than a century.

Canadian Pacific, incorporated in 1881, played a key role in the nation’s formation as its transcontinental line was pivotal in convincing British Columbia to join the newly-independent country. Canadian National was created in 1919 out of a collection of government-owned railways.

The very formation of Canadian National made Canadian Pacific “apoplectic” that it now had to compete with a government corporation, and Canadian National’s public backing was a sore spot for decades, Anastakis said. Even when Canadian National was privatized in 1995, it was initially run by Paul Tellier, a former high-ranking government official.

The two firms also reflect regional and political tensions in Canada, with Calgary-based Canadian Pacific representing the western, conservative part of the country, and Montreal-based Canadian National embodying the more liberal, elite character of the east, Moore said — as well as the bilingual nature of Quebec.

Despite the resurgence in their rivalry, the fact that at least one Canadian railroad may be positioned for a transformative acquisition is a positive for the country, which has often seen its own major enterprises bought out by international rivals, Anastakis said.

“You’ve got two gigantic Canadian rivals duking it out for an important American railway,” Anastakis said. “That’s a nice role reversal from a lot of Canadian business history.”

RELATED CONTENT

RELATED VIDEOS

Logistics Rail & Intermodal Transportation & Distribution
  • Related Articles

    How K.C. Southern Morphed From Rail Dark Horse to $30 Billion Prize

    Truckload Linehaul Rates Dip Recently, But Are Up Over a Year Ago

    Kansas Rail Company Breaks Up a Bottleneck at the U.S.-Mexico Border

Bloomberg

Global Oil Trade Shakes Up After Fires at U.S. Fuelmakers

More from this author

Wake up to live
“Supply Chains in Crisis”
updates and the latest Supply Chain News!

Subscribe to our Daily Newsletter

Timely, incisive articles delivered directly to your inbox.

Popular Stories

  • INTERIOR OF A CHICKEN FARM, WITH WHITE CHICKENS AS FAR AS THE EYE CAN SEE

    Worst Avian Flu in U.S. History Is Hitting Poultry

    Food & Beverage
  • TWO FINGERS MANIPULATE WOODEN LETTER BLOCKS TO TURN FROM SHOWING THE WORD RECOVERY TO RESILIENCE

    Five Challenges to Supply Chain Resilience in 2023

    Supply Chain Visibility
  • A PERSON HOLDS UP A TABLET COMPUTER IN A WAREHOUSE, SUPER-IMPOSED BY A GRAPHIC SHOWING A COMPLEX WEB OF SUPPLY CHAIN ELEMENTS

    Three Post-Pandemic Actions for Repairing Global Supply Chains

    Data Management (Big Data/IoT/Blockchain)
  • A MAN IN A SUIT SHAKES HANDS WITH A WOMAN IN A HARD HAT, NEXT TO A STACK OF CONTAINERS

    Three Procurement Technology Evolutions for 2023

    Sourcing/Procurement/SRM
  • The blank stare of a child's eye who is standing behind what appears to be a wooden frame

    The Alarming Continued Rise of Modern Slavery in Supply Chains: How Procurement Can Help Reverse the Trend

    Sourcing/Procurement/SRM

Digital Edition

Scb nov 2022 sm

2022 Supply Chain Innovator of the Year

VIEW THE LATEST ISSUE

Case Studies

  • New Revenue for Cloud-Based TMS that Embeds Orderful’s Modern EDI Platform

  • Convenience Store Client Maximizes Profit and Improves Customer Service

  • A Digitally Native Footwear Brand Finds Rapid Fulfillment

  • Expanding Apparel Brand Scales Seamlessly with E-Commerce Technology

  • How a Global LSP Scaled its Security Program and Won More Business

Visit Our Sponsors

Orderful Yang Ming Alithya
Barcoding Blue Yonder BNSF Logistics
CoEnterprise Data Capture Deposco
E2open GAINSystems Generix
Geodis GEP GreyOrange
Here Honeywell Intelligrated IFM
Infor Inmar Keelvar
Kinaxis Korber Lean Solutions Group 2H
Liberty SBF Locus Robotics Logility
LogistiVIEW Lucas Systems MCA Connect
MPO Nvidia Old Dominion
OpenText ORTEC Overhaul
Parsyl PMMI QIMA
Redwood Logistics Ryder E-commerce by Whiplash Saddle Creek Logistics
Schneider Dedicated Setlog Holding AG Ship4WD
Shipwell Tecsys TGW Systems
Thomson Reuters Tive Trailer Bridge
Vecna Robotics Verity
Verusen
  • More From SCB
    • Featured Content
    • Video Library
    • Think Tank Blog
    • SupplyChainBrain Podcast
    • Whitepapers
    • On-Demand Webinars
    • Upcoming Webinars
  • Digital Offerings
    • Digital Issue
    • Subscribe
    • Manage Your Subscription
    • Newsletters
  • Resources
    • Events Calendar
    • SCB's Great Supply Chain Partners
    • Supplier Directory
    • Case Study Showcase
    • Supply Chain Innovation Awards
    • 100 Great Partners Form
  • SCB Corporate
    • Advertise on SCB.COM
    • About Us
    • Privacy Policy
    • Contact Us
    • Data Sharing Opt-Out

All content copyright ©2023 Keller International Publishing Corp All rights reserved. No reproduction, transmission or display is permitted without the written permissions of Keller International Publishing Corp

Design, CMS, Hosting & Web Development :: ePublishing