Ackman-Backed CP Gets Rail-Customer Support in Bid for NS

January 29, 2016

By Frederic Tomesco, Bloomberg Business

Canadian Pacific Railway Ltd. has its first on-the-record allies in the quest to acquire Norfolk Southern Corp.Website Insert 5000 New Seats copy

Oil-and-gas terminal operator Dakota Plains Holdings Inc. and three other rail customers filed letters this month to the U.S. Surface Transportation Board in support of the proposed takeover. Filings to the board so far have been dominated by opponents of the merger, who warn it could raise rates, hurt service and reduce employment.

Canadian Pacific Chief Executive Officer Hunter Harrison has said that merging with Norfolk Southern would increase efficiency by creating a coast-to-coast railroad — reducing the need to exchange cars in congested hubs such as Chicago. The combined railroad also would be able to wring out cost savings and improve service, said Harrison, who has the support of Canadian Pacific investor Bill Ackman.

The Canadian carrier’s proposal “introduces a number of positive, future-focused ideas to vastly improve North America’s transportation network,” Dakota Plains President Gabe Claypool wrote in a letter dated Jan. 15. A merger “would improve overall service while creating meaningful competition” among the country’s biggest railroads, he said. There can be a lag between when letters are sent and when they are posted by the transportation board.

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