Norfolk Southern Sets May 12 Showdown Over Canadian Pacific Acquisition Bid
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Norfolk Southern Corp. set a May 12 showdown with potential buyer Canadian Pacific Railway Ltd. by announcing that date for the annual meeting. Shareholders will say whether they want the board to negotiate a merger with the Canadian carrier at the meeting.
The Norfolk, Virginia-based company disclosed the annual meeting date in a letter to employees asking those who are shareholders to reject the Canadian Pacific’s request for a shareholder resolution to further a $30 billion deal, which the U.S. railroad’s board has rejected three times. Canadian Pacific earlier this month began to solicit shareholder approval for its resolution, saying it could improve results for the U.S. railroad with the worst operating ratio among major carriers.
Canadian Pacific, which has offered $32.86 in cash, 0.451 of its shares and an additional payment based on future stock prices, has been trying since November to convince NS to negotiate a combination. CP claims it can boost NS profits before interest and taxes by $1.8 billion if its offer is accepted. The U.S. railway has said the price is too low, the combination won’t pass regulatory muster and that the railroad has its own plan to boost future profits.
“Over the past few months, our company has continued to execute on the five-year strategic plan to streamline operations, drive profitability and accelerate growth, which we announced in December,” CEO James Squires said in the employee letter.
“Significant positive change is already under way at NS,” he said, toward a goal of $650 million in annual savings over five years, though steps such as raising prices, moving more freight and cutting costs by consolidating offices and idling some routes where business has declined.
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