14 April 2016

[140416.EN.BIZ] Canadian Pacific Gives Up Campaign To Take Over Norfolk Southern

THE Canadian Pacific Railway (CP) has ended its campaign to buy Norfolk Southern (NS) after the US carrier rejected several proposals and opposition mounted to the merger plan.

"With no clear path to a friendly merger at this time, we will turn all of our focus and energy to serving our customers and creating long term value for CP shareholders," said CP chief executive Hunter Harrison said in a statement.

The company said it had withdrawn a resolution asking NS shareholders to vote in favour of negotiations for a deal.

"No further financial offers or overtures to meet with the NS board of directors are planned at this time," according to Canadian Pacific's statement.

CP has sought to buy NS, the second biggest eastern US railway to create a coast-to-coast network that it said would benefit shippers by reducing costs and congestion.

NS rejected three offers, including one in December that valued the company at $27 billion, as "grossly inadequate," while expressing concerns regulators would reject a tie-up.

The US Justice Department (DOJ) said Canadian Pacific's intention to create a voting trust to allow Mr Harrison to run Norfolk Southern in advance of a takeover should be rejected.

DOJ did not like the voting trust structure CP proposed, in which NS investors would be paid for their shares while the US railwayroad keeps operating pending a regulatory review.

DOJ said the trust would fail to keep the railways separate during the review and would risk harm to current and future competition.

"Canadian Pacific's voting trust proposal would compromise Norfolk Southern's independence and effectively combine the two railroads prior to completion of the STB's review," said DOJ antitrust chief Bill Baer.

The day before, the US Army said the merger had the potential to harm national defence.

Source : HKSG.

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