Bid report lifts CSX stock, but analysts skeptical of deal
By Nick Carey and Diane Bartz
CHICAGO Oct 13 (Reuters) - Shares of No. 3 U.S. railroad CSX Corp rose nearly 10 percent on Monday following a report of a rebuffed takeover bid by Canadian Pacific Railway Ltd, but analysts said any such deal would face significant regulatory and other hurdles.
According to the report in the Wall Street Journal late on Sunday, the No. 2 Canadian railroad made a bid last week for Jacksonville, Florida-based CSX, which rejected the offer. Both companies said they did not comment on market rumors.
Shares in Canadian Pacific were not traded Monday as the markets in Canada were closed for a holiday.
In a client note, Cowen & Co analyst Jason Seidl wrote that Canadian Pacific could in theory team up with hedge fund Pershing Square Capital Management and take a bid directly to CSX shareholders.
Activist investor William Ackman, who runs Pershing Square, in 2012 had recruited Hunter Harrison, who had previously been chief executive officer of Canadian National Railway Co , for that post at Canadian Pacific.
But Seidl said any deal was unlikely in the near term since shippers and regulators were "disenchanted" with the rail industry because of its service and capacity problems.
Severe weather last winter wreaked havoc on the major railroads' networks, while the rise in oil-by-rail shipments has caused delays for grain shippers.
Harrison has indicated that mergers could be a way to alleviate network congestion and improve service. Continued...