CP Rail abandons threat of proxy battle in adjusting Norfolk takeover strategy

MONTREAL -- Canadian Pacific Railway is asking Norfolk Southern shareholders to push the U.S. railway's board to enter into merger negotiations.

See Full Article

Calgary-based CP said Tuesday that instead of launching a proxy battle to elect a slate of sympathetic board members, it has submitted a proposal for a vote at the Virginia-based railway's next annual meeting.

The last one was held in May.

"We are not asking Norfolk Southern shareholders to vote on the existing proposal; we are simply asking them to vote in favour of having their board talk to us," CP Rail CEO Hunter Harrison said in a news release.

"We continue to believe in the potential to create a transcontinental railroad with Norfolk Southern and believe this is a fair and measured approach to getting a deal done."

Norfolk Southern spokesman Frank Brown declined to comment on CP's move. The railway has steadfastly refused to enter into negotiations on CP's US$30-billion offer as customers voiced their opposition to a deal.

Analyst Walter Spracklin of RBC Capital Markets said that while the vote is non-binding, strong support in favour of CP's motion would send a signal to Norfolk's board and "likely lead to engagement in talks."

CP Rail (TSX:CP) signalled a possible change a couple of weeks ago when Harrison criticized interventions by elected congressional leaders and challenged those who claimed CP's proposed use of a trust was unethical and illegal even though it has been used many times in the past.

Harrison told analysts the company was reviewing its strategy after saying it had failed to anticipate that politics would overtake the regulatory review process.

"If the deck is stacked (against us) and if somebody's got an ace up their sleeve and are not playing by the rules, then we understand that and we have to adjust accordingly," he said during a Jan. 21 conference call on CP's quarterly results.

CP said Tuesday that the cash-and-stock offer would create a company with the potential to grow earnings faster than either railway could achieve on its own, while delivering enhanced service to customers.

"Shareholders and analysts will be watching Norfolk Southern closely throughout 2016 and if they continue to underperform, the pressure to work with CP will only grow," added Harrison.

While he believes railway mergers will eventually be required to accommodate economic and population growth, Harrison has said CP would also assess whether to abandon its bid and instead focus on repurchasing its shares, which have fallen 35 per cent in the last year.

Canadian Pacific has filed a complaint with the U.S. Department of Justice asking antitrust authorities to look into whether major U.S. railways have conducted an illegal co-ordinated effort to block industry consolidation, including the proposed takeover of Norfolk Southern.



Advertisements

Latest Economic News

  • EU fines Google a record 2.42 billion euros

    Economic CTV News
    BRUSSELS -- The European Union has slapped a record 2.42 billion euro (US$2.72 billion) fine on internet giant Google on Tuesday for taking advantage of its dominance in online searches to direct customers to its own online shopping business. Source
  • Canada could use a $5 coin — and a lot less small change: Don Pittis

    Economic CBC News
    Foonie doesn't really work, so Canadians will have to put on their thinking caps to figure out a name for the $5 coin. As the loonie turns 30 this week, painful though it may be, we must inevitably begin to prepare ourselves to say goodbye to our blue Wilfrids. Source
  • Oilsands, mining companies watch B.C. solar project with intrigue

    Economic CBC News
    After a century of pulling lead and zinc from the Sullivan mine in southeast British Columbia, the energy company Teck recently shut down the operation and began years of restoration work. Some of the land outside the city of Kimberley became a meadow with grass and trees, but it remained tainted after decades of mining activity. Source
  • Several prospective jurors excused from Shkreli case over impartiality

    Economic CTV News
    NEW YORK - Several prospective jurors have been excused from the federal securities fraud trial of an ex-pharmaceutical company executive because they claimed they couldn't be impartial. Jury selection will continue Tuesday morning in Brooklyn. Source
  • Asian stocks move higher after mixed Wall Street result

    Economic CTV News
    SEOUL, Korea, Republic Of - Asian stocks were mostly higher in range-bound trade on Tuesday after Wall Street closed mixed. KEEPING SCORE: Japan's Nikkei 225 rose 0.3 per cent to 20,213.62 while South Korea's Kospi added 0.1 per cent to 2,391.33. Source
  • 'Like bombs': Bankrupt company's air bags still out there

    Economic CTV News
    Takata's lethally defective air bags proved to be the company's undoing Monday. But it could take years to get the dangerous devices off the road in the U.S. and around the world. Crushed by lawsuits, fines and recall costs, the Japanese auto parts supplier filed for bankruptcy in Tokyo and Delaware and will sell most of its assets for $1.6 billion to a rival company. Source
  • 'A seat at the table': GM CEO Mary Barra on engaging with Trump

    Economic CBC News
    At a time when some business leaders have pulled away from working with U.S. President Donald Trump, the head of General Motors sees a need for engagement with the White House. "I think it's always important when you have an opportunity to have a seat at the table to take it, where decisions are being made," GM CEO Mary Barra said during an exclusive interview with Peter Armstrong, host of CBC News Network's On the Money. Source
  • Alphabet partners with Avis to manage self-driving car fleet

    Economic CBC News
    Waymo, the self-driving car unit of Alphabet Inc, said on Monday it signed a multi-year agreement with Avis Budget Group Inc for the car rental firm to manage its growing fleet of autonomous vehicles, sparking a surge in Avis Budget's stock. Source
  • Air Miles raises cap on in-store redemptions

    Economic Toronto Sun
    TORONTO — Air Miles is raising some of the recent daily limits imposed on redeeming miles for in-store purchases from retailers. The customer loyalty program says the new daily limit on Air Miles Cash redemptions, in most cases, has been raised to $100. Source
  • Disgruntled U.S. Tim Hortons franchisees follow Canadian example, form alliance

    Economic CTV News
    TORONTO - A group representing Tim Hortons franchisees who are unhappy with the management of the coffee-and-doughnut chain says it now has a U.S. chapter, a development that could put further pressure on the parent company. Source