Cargo Business Newswire

Thursday, November 19, 2015

Top Story

Norfolk Southern rebuffs $28B offer from Canadian Pacific

U.S. railroad operator Norfolk Southern Corp all but rejected a $28.4 billion acquisition offer by Canadian Pacific Railway Tuesday, calling it "low-premium" and saying it would face significant regulatory hurdles.

While Norfolk Southern said it would carefully review the offer, its sour response represents a setback to Canadian Pacific as well as its largest shareholder, William Ackman's hedge fund Pershing Square Capital Management LP. Ackman is a big advocate of consolidation in the North American railway sector.

In a statement announcing its offer to Norfolk Southern, Canadian Pacific argued that the combined railroad would offer excellent customer service and competitive rates for shippers, and that it would satisfy the U.S. Surface Transportation Board and Canadian regulators.

The STB has a public interest test when considering whether to approve mergers, so a
deal would not only have to address antitrust

concerns but also result in improved service, economic efficiencies and public safety for those using the railways.

Yet not only has Canadian Pacific failed to convince Norfolk Southern that the merger could receive regulatory clearance, it has offered no protection for Norfolk Southern shareholders in the event the deal would be blocked, according to an anonymous inside source.

For more of the Reuters story: www.reuters.com