Canadian Pacific revises bid for Norfolk Southern
By Allison Lampert and Euan Rocha
MONTREAL/TORONTO Dec 16 (Reuters) - Canadian Pacific Railway Ltd slammed Norfolk Southern Corp on Wednesday, accusing it of misleading investors even as its executives rolled out a new bid with increased shareholder protections to acquire the U.S.-based railroad.
Executives from Canada's second-largest railroad took their appeal directly to Norfolk Southern's shareholders whom they offered an additional 0.451 of a Contingent Value Right (CVR) in a new company that could be converted to cash and would increase the value of the deal by up to $3.4 billion, they said.
Described as a type of 15-month "insurance policy," the CVR would protect shareholders in the event that the stock value of the new company combining CP and Norfolk Southern drops below what is expected, they said.
The CVR was added to the terms of CP's rejected December 8. For each share tendered Norfolk shareholders would now receive a CVR, along with $32.86 in cash and 0.451 of a share in a new holding company that would own both Norfolk Southern and Canadian Pacific.
"If this is going to be a street fight, so be it," said CP Chief Executive Hunter Harrison during a call with analysts on Wednesday. "The clock is ticking and it's ticking down. And it's time for some of us to take action." (Editing by James Dalgleish)
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