Canadian Pacific Asks STB to Rule on Viability of Norfolk Trust Structure


Canadian Pacific Railway is asking U.S. regulators to rule on the proposed voting trust structure it wants to use to acquire Norfolk Southern Corp.

Canada’s second-largest railroad will seek a declaratory order from the U.S. Surface Transportation Board confirming the viability of the mechanism, according to a statement Feb. 16. While urging Norfolk Southern to “assist constructively” in this effort, Calgary-based Canadian Pacific said it would proceed regardless of the U.S. carrier’s cooperation.

Bringing in the STB is the latest attempt by Canadian Pacific CEO Hunter Harrison to make headway in his efforts to build a transcontinental railroad.

“While we remain fully confident in our comprehensive regulatory plan, shareholders of both CP and NS have recommended that we seek this declaratory order,” Harrison said in the Feb. 16 statement. “We still think this action is unnecessary, however, we believe listening to the shareholders — the owners of our respective companies — is important.”

Norfolk Southern has rejected several approaches from Canadian Pacific, including one in December that valued the U.S. carrier at $27 billion, saying the merger and the proposed voting trust wouldn’t be approved by regulators.

Canadian Pacific said last week that it planned to submit a resolution to Norfolk Southern investors requesting that the U.S. company’s board “engage in good-faith discussions.” The U.S. railroad said such talks weren’t in shareholders’ best interests unless Canadian Pacific offered “compelling value” and addressed potential regulatory concerns.