Canadian Pacific explores Norfolk Southern takeover
By Greg Roumeliotis
NEW YORK (Reuters) - Canadian Pacific Railway Ltd (CP.TO: Quote) is exploring a potential acquisition of U.S. peer Norfolk Southern Corp (NSC.N: Quote), a person familiar with the matter said on Monday.
The two rail companies have held preliminary merger talks, but there is no certainty that negotiations will advance, the person added, asking not to be identified because the talks are confidential.
The discussions mark the Canadian railroad operator's second major consolidation play in little over a year, as it once again seeks to gain control of a railroad network that would give it access to the U.S. eastern seaboard and rail hubs like Chicago.
Norfolk Southern declined to comment. CP Rail in a release said it has "no material news pending at this time." The company added that it does not comment on market rumor and speculation.
Bloomberg, citing two people familiar with the matter, said earlier on Monday that Canada's No. 2 rail operator CP Rail is trying to raise financing to buy Norfolk Southern in a deal that would be worth over $24 billion. (bloom.bg/1ScVTK4)
CP Rail's Chief Executive Hunter Harrison has long contended that a creating a new transcontinental rail network could help improve congestion around Chicago, where east- and west-based railways meet and hand off cargo, a process that can take days.
The Canadian company's talks with CSX Corp CSX.N, which also owns a large network across the Eastern U.S. failed last year.
Investors cheered news of a potential tie-up, sending shares of Norfolk Southern up 11 percent to $88.62 on the NYSE, while CP Rail's stock closed up 5.7 percent at C$188.79 on the TSX. Continued...