UPDATE 1-Canadian Pacific revises hostile bid for Norfolk Southern

Wed Dec 16, 2015 1:19pm EST
Email This Article |
Share This Article
  • Facebook
  • LinkedIn
  • Twitter
| Print This Article | Single Page
[-] Text [+]

(Adds details from conference call, background on U.S. regulatory environment toward rail mergers, response from 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 said the deal is now in the hands of Norfolk Southern's shareholders, and urged its board to consider CP's latest proposal even as industry skeptics questioned whether such a merger could gain U.S. regulatory approval.

"The only way it's going to happen is if you show support for this transaction," CP Chief Executive Hunter Harrison told analysts on a conference call on Wednesday. "If you don't want it to happen all you've got to do is tell us."

CP executives offered an additional 0.451 of a Contingent Value Right (CVR) in a new holding company for CP and Norfolk Southern 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 company's stock value falls below $175 a share in October 2017. CP estimates the new holding company's stock will be worth $204 at the transaction's expected closing in May 2016.

The CVR was added to the terms of an offer previously rejected by Norfolk. 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.

Each railroad would be run separately by two different CEOs.   Continued...