3 Min Read
(Reuters) - Canadian Pacific Railway Ltd (CP.TO) has approached CSX Corp CSX.N about merging the two North American railroad operators to create a transcontinental carrier worth more than $60 billion, according to the Wall Street Journal.
The offer was made in the past week and was rebuffed, the newspaper said on Sunday, citing people briefed on the matter. It added that it was unclear if CP had shelved the plan.
CP spokesman Martin Cej and CSX spokeswoman Melanie Cost told Reuters their companies did not comment on market rumors.
Calgary-based CP has said it is interested in acquisitions as rail traffic surges on the back of the North American energy boom.
"Would we ever consider anything? As I've said publicly before, sure. But you got to have somebody to dance with and I don't know anybody that wants to dance now," CP Chief Executive Hunter Harrison said on a call with analysts on Oct. 1.
Harrison, a former CEO of Canadian National Railway (CNR.TO), joined CP in 2012 after being hand-picked by activist investor William Ackman, whose hedge fund Pershing Square Capital Management owns a large stake in the company.
Harrison was at CN when it tried to merge with Burlington National, which is now owned by Warren Buffett. That deal - the last attempted merger between two big "tier 1" railways - was scuttled in 2000 by the U.S. Surface Transportation Board due to competition concerns.
Any attempt to join CP and Jackson, Florida-based CSX, would also likely face intense regulatory scrutiny, said independent railroad analyst Anthony Hatch. If it were approved, he said, it would be "with such strings attached that they would feel like anchor chains."
CP, Canada's No. 2 railway by revenue, has a market value of about $32 billion, while Florida-based CSX, the No. 3 U.S. carrier, is worth about $30 billion.
Harrison has also said he is interested in buying or operating the small switching lines that knit together North America's major railways at Chicago.
Reporting by John McCrank in New York; additional reporting by Nick Carey in Chicago; Editing by Eric Walsh and Stephen Coates