Canadian Pacific Railway is continuing to pursue an acquisition of Norfolk Southern Corp., officially asking shareholders to force the NS board to engage in negotiations regarding a potential merger of the two Class I railroads.
Canadian Pacific Railway has filed a preliminary proxy statement with the United States Securities and Exchange Commission regarding its proposed takeover of Norfolk Southern Corp., according to a statement from the company.
The proxy statement outlines a shareholder resolution CP plans to file asking NS shareholders to force the board of directors to engage in negotiations with the Calgary-based railroad.
CP has since November sent three separate cash-and-stock offers valued at around $30 billion, each of which has been rejected by NS as “grossly inadequate” and unlikely to win regulatory approval from the U.S. Surface Transportation Board.
According to CP, however, “NS has refused to meet with CP to discuss the merits of a potential transaction,” which it argues “would create an integrated transcontinental railroad with the scale and reach to deliver unsurpassed levels of safety and service to the customers and communities of both companies.”
Opponents of the proposed combination, including fellow Class I railroads CSX Corp., Union Pacific Corp. and BNSF Railway, other members of Congress, rail unions, FedEx and UPS, have argued a merger would cause further consolidation in the industry that would lead to a decrease in competition and service levels. Most recently, Sens. Mike Lee, R-Utah, and Amy Klobuchar, D-Minn., the leaders the Senate Judiciary Subcommittee on Antitrust, Competition Policy and Consumer Rights, wrote in a letter to the U.S. attorney general’s office they are concerned the proposed acquisition could “limit the ability of the STB to protect competition.”
CP last week sent a petition to the U.S. Surface Transportation Board (STB) asking for a declaratory order confirming the viability of a proposed voting trust structure the company has suggested as part of the acquisition. Lee and Klobuchar, however, noted in their letter merging companies are not allowed to coordinate any sort of business integration prior to regulatory review under the Hart-Scott-Rodino Act.
“CP is seeking a declaratory order from the Surface Transportation Board and we have consistently indicated that we are open to discussing the terms of our previous offers,” CEO E. Hunter Harrison said. “With a vote ‘for’ the shareholder resolution, we hope to get NS to the table to discuss all the elements of the proposed business combination in an open and constructive manner.”
“This is an opportunity for NS shareholders – who have been telling us since the beginning that they are in favor of the proposed business combination – to speak up and be heard by NS’ board of directors,” he added. “We are not asking NS shareholders to vote on the business proposal itself, but to vote in favor of the shareholder resolution calling for NS to engage in good faith discussions with CP regarding a potential combination.”
CP files proxy statement with SEC regarding NS takeover bid
