Bid for Canadian Pacific could add to rail woes

19 July 2007 17:47  [Source: ICIS news]

TORONTO (ICIS news)--A takeover bid for Canadian Pacific (CP), Canada’s second largest rail carrier, could further consolidate North America's rail sector, adding to the tightness in chemical railcar capacity, analysts said on Thursday.

 

US and Canadian chemical makers have repeatedly warned that consolidation and a lack of competition in the railway sector were causing tight railcar capacities, poor service and high tariffs.

 

CP said in a filing it had received a bid by Brookfield, a Toronto-based property, infrastructure and asset management firm.

 

Analysts said if Brookfield succeeded it may seek to sell the railway business to a US rail firm as it was primarily interested in CP’s land assets. 

 

Alternatively, the bid could spur rival offers for CP from US railways, they said.

 

CP’s shares were priced at $86.96, down 2.29%, in Thursday morning trading in New York, after jumping 15% on Wednesday.

 

In the past few months foreign firms and equity funds have taken over a large number of Canadian firms, prompting calls for government intervention.

 

($1 = €0.73)

 

By: Stefan Baumgarten
+1 713 525 2653

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