Many possible pitfalls await Canadian Pacific’s Norfolk Southern bid

December 19, 2015

Dec 17 Canadian Pacific Railway Ltd’s $27 billion bid for Norfolk Southern Corp risks coming unstuck due to regulatory scrutiny of its impact on the U.S. rail market, in particular the possibility it could spark competition-crushing rival deals, according to former regulators and analysts.Website Insert State Supported Passenger Trains copy

Led by enigmatic, septuagenarian railroad legend Hunter Harrison, Canadian Pacific has assured investors that what it proposes – especially putting the transaction in a voting trust – has been approved in the past.

Canadian Pacific made its first bid for Norfolk Southern last month, arguing that it would improve competition and boost its target’s performance that has flagged recently due to declining coal volumes.

But assuming the hostile bid makes it through a long and nasty proxy fight – “If this is going to be a street fight, so be it,” Harrison said on Wednesday – the Canadian railroad would be in uncharted territory.

This would the first deal judged by the Surface Transportation Board, the U.S. rail regulator, since the regulator rewrote the merger rules in 2001.

Click here to read the full story from Reuters.

 

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