Canadian Pacific sweetens offer to buy Norfolk Southern railroad

CALGARY -- Canadian Pacific Railway has proposed an enhanced takeover offer for Virginia-based Norfolk Southern that adds up to $3.4 billion in potential payouts.

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The revised deal would give Norfolk shareholders a security with a maximum payout of $25.

The value of the security would depend on the value of the combined company's stock on Oct. 25, 2017, with no payment if the combined share price is above $175.

Activist investor Bill Ackman said shareholders should think of the security as an insurance policy that can be sold like an option.

Meanwhile, the core terms of the offer remain the same as last week's revised proposal with CP Rail (TSX:CP) offering to pay Norfolk shareholders US$32.86 in cash and 0.451 shares of stock.

Norfolk Southern has rejected the previous offers made by CP as "grossly inadequate."



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