Canada: Norfolk Southern rejects $28.1 billion CP merger offer

Norfolk Southern Corp. soundly rejected Canadian Pacific Railway Ltd.’s $28 billion merger proposal, labeling the offer “grossly inadequate and not in the best interests of shareholders.”

The offer that combined $46.72 in cash and 0.348 shares of stock was made on Nov. 17, as the Canadian railway led by CEO Hunter Harrison tried to pull off the first rail industry combination since 1999. The Virginia-based railroad said the proposal also created substantial regulatory risks and uncertainties that are highly unlikely to be overcome” and maintained that its strategy over the long term would deliver better service and higher profitability.

Norfolk’s operating ratio last quarter was 10 percentage points worse than Canadian Pacific. “We believe in our ability to generate greater shareholder value through execution of our strategy — delivering efficient and superior service to build a more profitable franchise based on price and volume growth, implementing efficiency measures, and increasing returns on capital to strengthen our financial performance, all while maintaining our disciplined capital return strategy,” CEO James Squires said in a statement. “Norfolk Southern has made growth investments, and we expect to realize the benefits of these investments in the years ahead, especially as our intermodal volumes continue to build.”

Full content: ABC News

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