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

    Nova Scotia Community Grieving After Teacher, Two Young Students Die In Highway 104 Car Crash

    Nova Scotia Community Grieving After Teacher, Two Young Students Die In Highway 104 Car Crash
    Ford Rice of the Port Hastings-based Strait Regional School Board says many people have been affected by the deaths of the 26-year-old woman and two girls, ages 12 and 13.

    Nova Scotia Community Grieving After Teacher, Two Young Students Die In Highway 104 Car Crash

    OPP Launches Mental Health Strategy To Help Officers And The Community

    OPP Launches Mental Health Strategy To Help Officers And The Community
    VAUGHAN, Ont. — Ontario Provincial Police have introduced a mental health strategy aimed at helping officers deal with their own mental health as well as those they deal with on the job.

    OPP Launches Mental Health Strategy To Help Officers And The Community

    Greg Boswell, Scottish Climber Lives To Tell Tale Of Attack By Grizzly In The Canadian Rockies

    Greg Boswell, Scottish Climber Lives To Tell Tale Of Attack By Grizzly In The Canadian Rockies
    TORONTO — A Scottish man says he's recovering after being attacked by a grizzly bear while climbing in the Rocky Mountains. On his Facebook page, Greg Boswell says he's "OK, just a little shook up and sore."

    Greg Boswell, Scottish Climber Lives To Tell Tale Of Attack By Grizzly In The Canadian Rockies

    Canadians Borrowing More, But Delinquency Rate Lowest In More Than Six Years

    Canadians Borrowing More, But Delinquency Rate Lowest In More Than Six Years
    OTTAWA — Canadians in oil-producing provinces are having a harder time paying their bills, even as the national delinquency rate improves to its lowest level in more than six years.

    Canadians Borrowing More, But Delinquency Rate Lowest In More Than Six Years

    Complaints For Wireless Down For First Time While Internet Issues Rise: Watchdog

    Complaints For Wireless Down For First Time While Internet Issues Rise: Watchdog
    TORONTO — Canadians had fewer official complaints about their wireless communication services but more concerns about their Internet plans, according to the latest report from the telecom industry's consumer watchdog.

    Complaints For Wireless Down For First Time While Internet Issues Rise: Watchdog

    Former Calgary Hospital Worker Charged With Accessing Information On 240 People

    Former Calgary Hospital Worker Charged With Accessing Information On 240 People
    EDMONTON — A former Calgary hospital worker is facing 26 counts of accessing the health information of more than 200 people.

    Former Calgary Hospital Worker Charged With Accessing Information On 240 People