CP says it offers a 'sizable premium' for NS

Trains Industry Newsletter
Get a weekly roundup of the industry news you need.
By signing up you may also receive occasional reader surveys and special offers from Trains magazine. View our privacy policy.
CP
Aiming to add context to its offer to buy Norfolk Southern — and appease shareholders over what appeared to be a lowball bid — Canadian Pacific today released the full merger proposal letter CEO E. Hunter Harrison sent to his NS counterpart, James Squires.

“CP also wishes to correct any misconceptions about the sizable premium offered to NS shareholders,” CP says in a statement accompanying the letter. CP says its offer of a 50-50 cash-stock transaction was a 23 percent premium over NS’s 45-day average share price of $79.14. The CP letter was dated Nov. 9 and since then NS stock has climbed due to market speculation about a potential merger.

On Tuesday, NS said the offer from CP was “low premium,” coming in at less than a 10 percent bump over its current stock price.

In the letter to Squires, Harrison called the combination a “transformational opportunity” that would be a win for both railroads, their shareholders, and shippers.

“As our combined network creates more comprehensive end-to-end shipment solutions for our customers while reducing congestion in key corridors such as Chicago, network capacity will expand allowing us to improve service and lower costs – which is both pro-shipper and pro-competition,” Harrison wrote. “A combined network will also lead to faster growth for the new entity versus what either of us would be able to achieve on our own and, importantly, would create a larger, more diversified book of business less dependent on volatile commodities such as crude oil or thermal coal.”

Harrison also wrote that CP had done its homework on the regulatory environment, assuring “a smooth and expeditious review and approval process.” Assuming NS is willing and regulators would approve the merger – and those are big “ifs” – CP envisions closing on the deal on Dec. 31, 2017.

Yesterday NS said a merger “would face significant regulatory hurdles.”

The full text of CP’s letter to NS is available online.
Leave a Comment
Want to leave a comment?
Only registered members of TrainsMag.com are allowed to leave comments. Registration is FREE and only takes a couple minutes.

Login or Register now.
Please keep your feedback on-topic and respectful. Trains staffers reserve the right to edit or delete any comments.
0 COMMENTS
FREE DOWNLOAD

FREE DOWNLOAD

150 facts about the Transcontinental Railroad.

SEE INSIDE THIS ISSUE

Learn more about the stories and photos in this months issue

Newsletter Sign-Up

By signing up you may also receive occasional reader surveys and special offers from Trains magazine.Please view our privacy policy
Subscribe Up To 54% off the newsstand price!
Subscribe To Trains Mag Today
+