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Canada: Will antitrust problems endanger Canadian Pacific bid?

By  |  November 25, 2015

The CEO of Canadian Pacific Railway has floated a creative way for holders of target Norfolk Southern to quickly cash in and avoid regulatory risk should they accept his $28.4 billion offer. But the plan is fraught with risk, and underscores the uphill battle Canadian Pacific faces as it attempts to consolidate the rail business.

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    CP chief Hunter Harrison in interviews over the past few days suggested that his company could create a voting trust or special holding company to house Norfolk Southern during what is expected to be a prolonged regulatory review of a deal, allowing the target’s shareholders to get a quick payout and transferring the regulatory risk to the acquirer.

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    Norfolk Southern, which is reviewing CP’s overture, has cited regulatory worries as a key factor in preventing railroad consolidation. Should the two sides agree to a deal the US Surface Transportation Board would have one month to accept a merger application and up to 16 months to render a decision, with considerable input expected from shippers and railroad rivals.

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