Canada's CP Rail offers to buy Norfolk Southern
(Reuters) - Canadian Pacific Railway Ltd (CP.TO: Quote) CP.N said it offered to buy U.S. railroad operator Norfolk Southern Corp (NSC.N: Quote), as it looks to gain a foothold in the eastern United States.
Shares of Norfolk Southern, which has a market value of about $23.36 billion, were down slightly after rising as much as 6 percent in after-hours trading on Tuesday.
The proposal includes a "sizable premium in cash and stock" to Norfolk shareholders, Canadian Pacific said, without providing further details.
Canadian Pacific said it expects a green signal from the U.S. Surface Transportation Board and Canadian regulators for a deal.
However, regulators have not been very open to railroad mergers. Canadian National Railway Co's (CNR.TO: Quote) bid to buy Warren Buffett-owned Burlington Northern Santa Fe [BNI.UL] was blocked by U.S. regulators in 1999-2000.
Canadian Pacific's talks with CSX Corp CSX.N, which also owns a large network across the Eastern United States, failed last year.
A deal would improve congestion around Chicago, Canadian Pacific said in the statement on Tuesday.
East- and west-based North American railways meet in Chicago and hand off cargo, a process that can take days.
The new company would give shippers the choice of where they can connect with another railroad along its network, bringing an end to the practice of "bottleneck pricing", Canadian Pacific said. Continued...