Canada/US: Norfolk Southern steps up fight against merger

Norfolk Southern urged employees to vote down Canadian Pacific Railway effort to enlist shareholders to press the board for friendly merger talks at its annual meeting, which it scheduled for May 12.

In a letter to employees the company made public in a securities filing Tuesday, Norfolk Southern Chief Executive Jim Squires said that the company is making good progress on its restructuring plans and that employees should vote no on merger talks.

Separately, in the company’s proxy filed late Monday, the railroad’s board said it would be willing to start merger discussions if Canadian Pacific “indicates a willingness to meaningfully increase the value represented by its proposal,” and if the U.S. Surface Transportation Board were to indicate that it would be willing to approve an interim trust structure that would operate during a lengthy regulatory review.

Canadian Pacific has sought an order from the board declaring that the proposed structure is valid.

A Canadian Pacific spokesman said that it has been flexible on price, and that any negotiations about the value of its bid need to be in good faith and face-to-face. Canadian Pacific “remains open to working with [Norfolk Southern] to successfully structure a transaction that will better serve customers, enhance competition and create far more shareholder value than strategic plan,” the spokesman added.

Full content: The Wall Street Journal

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