CP Gives Up Trying to Acquire NS

Canadian Pacific gave up on Monday its struggle to acquire Norfolk Southern.

The Calgary-based railroad said it was withdrawing a resolution that was to have been voted on by NS shareholders that would have directed NS management to discuss a merger.

The NS board of directors had rejected three offers from CP to buy NS stock.

CP said in a news release that it would have “no further financial offers or overtures to meet with the NS board.”

That wording of the statement appears to leave open the possibility of trying again at a later time.

“We have long recognized that consolidation is necessary for the North American rail industry to meet the demands of a growing economy, but with no clear path to a friendly merger at this time, we will turn all of our focus and energy to serving our customers and creating long-term value for CP shareholders,” said CP CEO E. Hunter Harrison.

CP has contended for several months that a merger with NS would create a North American transcontinental railroad that would enhance competition, ease freight congestion and improve service to shippers.

NS said in a statement that it remains committed to its five-year strategic plan to streamline operations, cut expenses and maintain superior customer service.

“The Norfolk Southern team has made significant progress and is on track to achieve annual productivity savings of more than $650 million and an operating ratio below 65 percent by 2020,” NS said. “We are confident the continued execution of our plan will deliver superior value to all of the company’s stakeholders by best positioning Norfolk Southern to succeed.”

The NS statement also thanked the company’s shareholders for their views and support. The company also lauded its employees for their hard work and dedication.

CP may have been motivated to give up its efforts to acquire NS after the antitrust division of the U.S. Department of Justice filed a statement with the U.S. Surface Transportation Board that described CP’s plans as being anti-competitive by compromising the independence of NS during the merger review process.

The Justice Department said that although Harrison and select CP executives would have cut their connections with CP, the latter would still exert a great deal of influence over NS and that would effectively combine the two carriers.

Tags: Canadian Pacific, Class 1 railroad mergers, CP-NS merger, CP-NS merger talks, Norfolk Southern, railroad mergers