America - A potential merger of Canadian Pacific Railway Ltd. (CP) and Norfolk Southern (NS) would make it hard for No. 3 U.S. railroad CSX Corporation (CSX) to survive alone and ratchet up pressure for more industry consolidation, the chairman of No. 2 U.S. railroad Burlington Northern Santa Fe (BNSF) said on Thursday.
 
"CSX would be at an enormous competitive disadvantage and so there would be another step towards consolidation," Matt Rose told Reuters on the sidelines of the semiannual meeting of the Midwest Association of Rail Shippers.
 
Rose reiterated that this is not the right time for mergers as "our belief is that our customers do not want mergers to occur."
 
But he said if a merger of CP and NS appeared likely then BNSF, which is owned by Warren Buffett's Berkshire Hathaway Inc., would bid for another railroad.
 
CP in mid-November disclosed its $28 billion offer to buy NS.
 
NS has spurned the Canadian railroad's interest, setting the scene for a proxy battle.
 
Some customers and legislators have written to the Surface Transportation Board (STB), the regulator that would review any merger proposal, opposing the proposed deal.
 
Rose said BNSF would not likely make a competitive bid for NS.
 
CP has said operating synergies from a merger with NS would lead to savings of more than $1.8 billion.
 
Rose said that figure is very high compared with prior rail mergers.
 
"I don't know if we would ever do a competitive bid for NS because we don't see $1.8 billion in natural synergies. We may (do a bid), but we think the synergy numbers are enormous."
 
Any deal would likely face a review from the STB, which tightened guidelines for mergers following a slew of deals in the 1990s.
 
The regulator would have to weigh whether a CP and NS merger would lead to other deals.
 
Rose said a deal would see the "final map redrawn" for North America's railroads.
 
"You don't have to have a lot of imagination when there's only seven railroads to get down to two railroads," he said.
 
"The chairs get taken away pretty quick."
 
Rose said he has discussed the merger issue with Buffett and has his support for whatever is in the long-term interests of BNSF.
 
"He expects me to run this company. But if I went to him and said I need $30 billion to buy a railroad, we would have more than a phone conversation."
 
Nick Carey.