OTTAWA, Feb. 15 -- Canadian Pacific Rwy. Co., a storied "ribbon of steel" that knit a far-flung Canada together in 1885, is about to become the independent railway company it once was, the Journal of Commerce Online reports.

But, perhaps not for long. And, perhaps, no longer Canadian.

After the railroad's holding company said Tuesday that it was splitting its transportation and energy holdings into five separate companies, analysts and media speculated that CPR might be swallowed up by Union Pacific, the largest rail carrier in the U.S., with which it already has various freight traffic alliances.

Canadian Pacific is the smallest of the six remaining Class I railways in the U.S. and Canada.

The other takeover company most-commonly mentioned is CPR's larger domestic and continental rival, Canadian National Rwy., which is developing into a major North American player.

"Union Pacific probably would be interested in a partner in Canada, especially if the CN-Burlington Northern Santa Fe merger were to go ahead," Avi Dalfen, an analyst with Research Capital Corp. in Toronto, said. As the smallest of the Class I railways, it is a natural takeover target from the point of view of carriers, though not necessarily of competition regulators, he said.

Union Pacific and CPR are longtime allies and UP's chief executive, Richard Davidson, is reported by analysts to have said UP already has "taken a hard look" at buying CPR. As for a merger of CN and CP, "it would make huge business sense since they already are cooperating on parts of their networks," Dalfen said.

He noted that CN president and chief executive Paul Tellier told analysts recently that a CP-CN merger was feasible and that he would welcome a review of such a possible merger by government authorities. Tellier's view was that "intermodal competition" would remain even with one national railway left.

If a merger of the two Canadian national railways were forbidden after such a review process, one with an American railroad" would become more palatable," Dalfen said.

David O'Brien, chairman of Canadian Pacific Limited, the holding company for CPR, CP Ships and three other companies in hotels, petroleum and coal, announced Tuesday that CPL was splitting them off into five publicly traded companies. He said there is no legal impediment in Canada to foreign ownership of CPR but that the federal government would face a "huge public policy concern."

Canada's two national rail lines run more or less parallel to each other across the country. While there would not be end-to-end laying together of two systems, as there was when CN took over Illinois Central in the U.S., or in its present proposed takeover of Wisconsin Central Transportation Corp. in the U.S., "the reduction of overlap and the paring down of redundant track are not really the game anymore," said Mark Mettrick, transportation analyst at Standard and Poor's Rating Service, in Toronto.

Benefits to an American line or CN of a CPR takeover lie more in larger and more integrated "information systems and interchange systems that allow seamless billing, shipping and tracking," Mettrick said.

Nothing will happen until a moratorium on railway mergers imposed by the Surface Transportation Board in the U.S. ends in June. A review underway now will produce a policy that would affect CPR. Canadian Pacific has 14,000 miles of its own track, including 4,800 in the U.S. Midwest and U.S. Northeast. It has running and haulage agreements and other connections with U.S. railroads serving New York City, Philadelphia and Washington, DC, in the east, Montreal-Chicago for the Midwest, and on the West Coast of North America.

With Union Pacific and two Mexican railroads it takes part in a seamless intermodal service linking Canada, the U.S. and 16 Mexican markets.

CPR and CNR tried and failed three times in the 1990s to put their eastern North America networks together. Last year they went the "co-production"* route. They agreed to share tracks in Ontario, the U.S. Midwest and the Northeastern United States. They already had an agreement to carry each other's trains in parts of British Columbia.

CPR is largely a carrier of grain, coal, fertilizers, potash and mineral resource products, mostly from Western Canada into the U.S., or to export at Vancouver, British Columbia. It also carries 80% of the intermodal freight between the Port of Montreal and the U.S. Midwest and industrialized Central Canada. It carries 60% of the intermodal traffic of the Port of Vancouver.