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Strategies & Market Trends : Value Investing

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To: Paul Senior who wrote (33286)	1/13/2009 10:41:15 PM
From: Spekulatius	Read Replies (2) of 78748

re RR, GWR seems pretty expensive. KSU was traded as a takeover candidate and think it would be good for them to take a decent offer. the main thing that they have going against them is the high cost or capital because of their lousy credit rating. It seems to me that those RR really should at looking to create a cost to cost network. We have CSX&NSC in the east and UNP and BNI in the west. If an east cost player combines with a west coat play is would create a cost to cost player with fairly little overlap. Since all stocks are in the same doghouse, they could do it as a simple stock exchange and merger of equals. This way they would not need to do these huge cost savings that need to be done for a takeover to justify the premium and that tends to screw everything for their customers. They could do the integration slowly - now that business is slow and pricing weakens would be the time to do it. Seems to make sense which probably means it's not going to happen. However i'll keep an eye on KSU. I think there is a good chance that they aren't a standalone entity in 5 years any more.

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