Norfolk formally rejects latest offer, CP Rail board reviewing next steps

MONTREAL -- Canadian Pacific Railway's board is meeting to review Norfolk Southern Railway's formal rejection of its revised merger proposal, a company official said Monday.

See Full Article

The Calgary-based railway, which is conducting a regularly scheduled meeting Monday and Tuesday, declined to indicate what next steps it is considering.

In a letter dated Dec. 14, Norfolk Southern informed CP Rail (TSX:CP) that it considers the revised offer to have less value and cash than the prior proposal which is determined was "grossly inadequate."

It added that last week's revised offer, including an "unprecedented voting trust structure" that Norfolk Southern says will give CP "premature control" over the U.S. railway, is unlikely to be approved by the U.S. regulator.

"It is the board's unanimous view that your proposal continues to be grossly inadequate, creates substantial regulatory risks and uncertainties that are highly unlikely to be overcome, and is not in the best interest of the company and its shareholders," said a statement from Norfolk's CEO and chairman, Jim Squires, and lead independent director Steven Leer.

CP's revised deal would see Norfolk Southern shareholders receive $32.86 in cash and 0.451 shares of stock in the combined company -- a bid Canadian Pacific characterized as a "substantially more financially attractive offer" than the original proposal of US$46.72 in cash and 0.348 of the new company.

Under the revised proposal, CP Rail chief executive Hunter Harrison would quit and sever all financial ties with Canadian Pacific to run Norfolk Southern until 2018 or 2019, when Canadian Pacific chief operating officer Keith Creel would take over to run the merged company.

The two companies would merge in the fall of 2017 after the U.S. regulator gives its approval. If the merger isn't sanctioned, the voting trust would end and the two companies would cut ties, with Harrison remaining at the helm of Norfolk Southern.



Advertisements

Latest Economic News

  • Asian markets mostly higher after Wall Street sinks

    Economic CTV News
    BEIJING -- Asian stock markets rose Tuesday after Wall Street sank on worries that the Trump administration might not do as much for businesses as once thought. KEEPING SCORE: Tokyo's Nikkei 225 gained 1 per cent to 19,174.56 and Hong Kong's Hang Seng advanced 0.5 per cent to 24,317.93. Source
  • American Airlines buys stake in China Southern Airlines

    Economic CTV News
    BEIJING -- American Airlines has agreed to pay US$200 million for a stake in China Southern Airlines, one of China's three major state-owned carriers, in a bid for a bigger share of the country's growing travel market. Source
  • Sask. city pays Domtar $5.1M over tax assessment dispute

    Economic CTV News
    PRINCE ALBERT, Sask. - City council in Prince Albert, Sask., has authorized a $5.1 settlement with Domtar in a tax dispute over the valuation of a pulp mill Domtar purchased from Weyerhaeuser in 2006. Domtar had argued the assessment of its property was too high for 2009 and 2010 and requested a refund. Source
  • Ontario promises housing affordability measures in the spring budget

    Economic CTV News
    TORONTO -- Ontario Finance Minister Charles Sousa confirmed Monday he plans to include housing affordability measures in his upcoming budget. Premier Kathleen Wynne has said her government is working on a "comprehensive set of plans," to deal with rising home prices in the Greater Toronto and Hamilton Area (GTHA), as well as rising rental rates. Source
  • Home Capital terminates CEO Martin Reid

    Economic CBC News
    Home Capital Group Inc. has terminated its president and CEO Martin K. Reid, effective immediately. Kevin P.D. Smith, chair of the board of directors, said in a statement Monday that the Toronto-based mortgage lender requires leadership that can bring a renewed operational discipline, emphasis on risk management and controls, and focus on improving performance. Source
  • B.C. First Nation gives nod to proposed LNG export facility

    Economic CTV News
    VANCOUVER -- A First Nation on Vancouver Island has approved a proposed liquefied natural gas export facility on its traditional territories. Leaders of the Huu-ay-aht First Nation and the CEO of Vancouver-based Steelhead LNG held a joint news conference in Vancouver on Monday to announce what Chief Robert Dennis said was the First Nation's "official entry into the international business world. Source
  • Officials gear up to assign infrastructure cash or lose control over its spending

    Economic CTV News
    OTTAWA - Provincial governments have been warned that they have until this time next year to start assigning billions in infrastructure cash to eligible projects, or else they could lose control over how it can be spent. Source
  • B.C. appeal court rules against Burnaby in bylaw battle with Trans Mountain

    Economic CTV News
    VANCOUVER -- A legal battle between the City of Burnaby and the Trans Mountain pipeline expansion has ended with the British Columbia Court of Appeal ruling the National Energy Board can override municipal bylaws. The fight began in 2014 when Trans Mountain was set to begin field studies on Burnaby Mountain, which required it to cut down trees, drill boreholes and operate heavy machinery -- activities that violate the city's bylaws. Source
  • Finance minister to tout Canada-U.S. trade to U.S. governors and mayors

    Economic CTV News
    CALGARY -- Canada's finance minister says he intends to head south of the border next week to reinforce the importance of Canada-U.S. trade. "Our approach was to be deeply engaged with the new administration from Day 1 . Source
  • Heroux-Devtek stocks drop after USAF rejects bid for new contract

    Economic CTV News
    LONGUEUIL, Que. - Heroux-Devtek Inc. shares hit a 52-week low Monday after the landing gear maker said its bid for a new contract with the U.S. military was rejected and work under an existing contract will be phased out within two years. Source