Close X
Friday, November 29, 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

    Stabbing At Emily Carr University After Dispute Between Students, Classes Cancelled

    Stabbing At Emily Carr University After Dispute Between Students, Classes Cancelled
    Vancouver police say a dispute between two students escalated into a stabbing that has prompted Emily Carr University of Art and Design to cancel classes today.

    Stabbing At Emily Carr University After Dispute Between Students, Classes Cancelled

    Surrey Board Of Trade Gives Surrey Food Bank $1500 And 400 Pounds Of Food

    Surrey Board Of Trade Gives Surrey Food Bank $1500 And 400 Pounds Of Food
    Over 400 business people attended this annual Christmas event, and donated either cash or food.

    Surrey Board Of Trade Gives Surrey Food Bank $1500 And 400 Pounds Of Food

    Toronto Police Arrest Man Following Argument With Officers

    The video, shot last Friday outside a liquor store in the northwest end of the city, shows a white officer restraining a black man by kneeling on his back.

    Toronto Police Arrest Man Following Argument With Officers

    Breathalyzer History Records Ruled Off-Limits In Drunk-driving Cases

    Breathalyzer History Records Ruled Off-Limits In Drunk-driving Cases
    The ruling limits disclosure of records accused frequently ask for in drunk-driving prosecutions.

    Breathalyzer History Records Ruled Off-Limits In Drunk-driving Cases

    Liberals Try To Put A Lid On Controversy Surrounding Two Trudeau Nannies

    Liberals Try To Put A Lid On Controversy Surrounding Two Trudeau Nannies
    OTTAWA — The Liberals are attempting to put a lid on concerns raised about two taxpayer-funded nannies who provide care for Justin Trudeau's three young children.

    Liberals Try To Put A Lid On Controversy Surrounding Two Trudeau Nannies

    Abbotsford Store Owner And Wife Get Pepper Sprayed Before Robber's Short-lived Getaway

    A 36-year-old man who allegedly used pepper spray during a store robbery in Abbotsford, B.C., didn't get far before being nabbed.

    Abbotsford Store Owner And Wife Get Pepper Sprayed Before Robber's Short-lived Getaway