Norfolk Southern Rejects Canadian Pacific’s $28 Billion Acquisition Offer

[mahatmakanejeeves]

Business

Norfolk Southern Rejects Canadian Pacific’s $28 Billion Acquisition Offer

Says cash-and-stock proposal undervalues company, unlikely to be cleared by regulators

By Chelsey Dulaney
[e-mail]
@chelseydulaney

Updated Dec. 4, 2015 9:00 a.m. ET

Norfolk Southern Corp. has rejected Canadian Pacific Railway Ltd.’s unsolicited acquisition offer, valued at over $28 billion, saying the tie-up undervalues the company and is unlikely to be cleared by regulators.

In a news release, Norfolk Chief Executive James A. Squires said there was a “high probability” that the deal would be rejected by the U.S. rail-industry regulator, the Surface Transportation Board.

”Even if the proposed combination were ultimately to be cleared, it would be subject to a wide range of onerous conditions that would reduce the value of the stock consideration that has been proposed,” Mr. Squires said.
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CP unveiled its offer in November in a bid to create a North American rail network that stretches from Canada’s West Coast to the Gulf of Mexico and Atlantic Ocean.
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—Ben Dummett contributed to this article.

[elleng]

1. Very interesting (to SOME of us, anyway!)

Don't know about 'likely' to be rejected by STB (where I used to work and supervise major rail merger cases,) but surely likely to be subjected to conditions. 'Onerous' is in the eye of the beholder, of course.

ICC, STB's predecessor, only REJECTED ONE of the many proposed mergers during the busy '80s-90s, that the mostly parallel and clearly un-competitive, SP and ATSF. http://articles.latimes.com/1986-07-24/news/mn-31659_1_railroads We the staff thought it should be rejected, recommended such, but were surprised that the Commission had the guts to do it.