Close X
Friday, November 8, 2024
ADVT 
National

Over To You, CP Rail: Norfolk Southern Rejects Proposed US$28 Billion Merger

Darpan News Desk The Canadian Press, 04 Dec, 2015 12:25 PM
    MONTREAL — Your move, Hunter Harrison.
     
    The straight-talking CEO of Canadian Pacific Railway saw his takeover bid for one of the biggest rail companies in the U.S. rejected Friday over concerns it would not secure regulatory approval.
     
    Norfolk Southern also called the US$28 billion offer — which would create the largest railroad on the continent — "grossly inadequate."
     
    "Our board is really confident in our strategic plan and that it is superior to CP's inadequate and high-risk proposal," Jim Squires, chairman and CEO of Norfolk Southern, said Friday during a conference call.
     
    Squires said CP Rail's short-term, "cut-to-the-bone strategy" doesn't align with Norfolk Southern's plan to boost revenues and reduce costs.
     
    Calgary-based CP Rail (TSX:CP), the second-largest railway in Canada, offered US$46.72 in cash plus 0.348 shares in the new company, which would be owned 41 per cent by Norfolk Southern shareholders.
     
    Harrison, who said this week that CP Rail has received positive feedback from the Virginia-based company's shareholders and shippers, has described the offer as a starting point for further negotiations.
     
    An American by birth, Harrison has a reputation as an efficient railway operator, based on his experience in the U.S. and as a former CEO of Montreal-based Canadian National (TSX:CNR).
     
    CP Rail is now reviewing Norfolk Southern's statements, company spokesman Marty Cej said.
     
    While Squires declined to indicate if Norfolk's board of directors would be receptive to an improved proposal, he was doubtful that any transaction could win regulatory approval in the U.S.
     
    "We view substantial regulatory risk and uncertainties that would likely be insurmountable," he said.
     
    CP Rail said its proposal is aimed at bypassing a congested transportation hub in Chicago. But Squires said CP Rail has overstated the positive impact for the rail industry that such a merger would bring about, adding that CP Rail's traffic volume is the smallest of any major rail carrier, with less than five per cent of all Chicago traffic.
     
    The combined company would initially have more than 44,000 employees with about 53,000 kilometres of track — greater than the circumference of Earth — stretching from the Pacific to the Atlantic Ocean and south to the Gulf of Mexico.
     
    It is estimated that the merged railway would generate more than $3.1 billion of profits, about twice that of CP Railway, with $21.5 billion in annual revenues.
     
    The new railways would also be less exposed to grain and more heavily weighted to industrial and consumer goods, along with coal.

    MORE National ARTICLES

    Retired Couple In Orangeville, Ont., Opens Home To Syrian Refugees

    Retired Couple In Orangeville, Ont., Opens Home To Syrian Refugees
    The Logels' three children and five grandchildren, themselves frequent visitors to the family homestead located on four hectares outside town, are coming for Christmas, though the Logels recognize the holiday isn't one their guests celebrate.

    Retired Couple In Orangeville, Ont., Opens Home To Syrian Refugees

    Quebec Tells Doctors To Respect Court Decision Suspending Right-to-die Law

    Quebec Tells Doctors To Respect Court Decision Suspending Right-to-die Law
    MONTREAL — Doctors must respect a court ruling suspending Quebec's assisted-suicide law but the government won't go on a "witch hunt" against physicians who offer palliative sedation,  the province's health minister said Wednesday.

    Quebec Tells Doctors To Respect Court Decision Suspending Right-to-die Law

    Defence Lawyer Calls Travis Vader, Accused In Deaths Of Couple, A 'Victim'

    Brian Beresh's comments came Wednesday during his questioning of Sgt. Rick Jané, the head RCMP investigator in the deaths of Lyle and Marie McCann, who vanished on a trip to B.C. in 2010.

    Defence Lawyer Calls Travis Vader, Accused In Deaths Of Couple, A 'Victim'

    Toronto Teen With Cystic Fibrosis Gets Second Go At Life With First-of-its-kind Triple Transplant

    Toronto Teen With Cystic Fibrosis Gets Second Go At Life With First-of-its-kind Triple Transplant
    TORONTO — A Toronto teen with cystic fibrosis has been given a second chance at life with a first-of-its-kind triple-organ transplant.

    Toronto Teen With Cystic Fibrosis Gets Second Go At Life With First-of-its-kind Triple Transplant

    Moose Cull On Cape Breton Highlands National Park Resumed Wednesday

    CAPE BRETON, N.S. — A Parks Canada plan to reduce the moose population on Cape Breton Highlands National Park through a cull for Mi'kmaq hunters resumed Wednesday.

    Moose Cull On Cape Breton Highlands National Park Resumed Wednesday

    Throne Speech To Focus On Immediate Priorities For New Trudeau Government

    Throne Speech To Focus On Immediate Priorities For New Trudeau Government
    OTTAWA — The Trudeau government's first throne speech is likely to be one of the shortest in Canadian history.

    Throne Speech To Focus On Immediate Priorities For New Trudeau Government