UPDATE 2-U.S. House Transportation chief opposes CP, Norfolk rail merger

Tue Apr 5, 2016 12:51pm EDT
 
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(Adds comment from Canadian Pacific, background, stock moves)

By David Morgan and Nick Carey

WASHINGTON/CHICAGO, April 5 (Reuters) - The chairman of the U.S. House Transportation and Infrastructure Committee announced his opposition on Tuesday to Canadian Pacific's proposed railroad merger with Norfolk Southern Corp, dealing a fresh blow to the prospect of a deal.

"I do not believe it is in the best interests of the U.S. freight transportation system, railroad employees, rail shippers and the short line railroads," Representative Bill Shuster, a Pennsylvania Republican, said in a statement.

"I believe it is time for all parties to move on from hypothetical merger proposals," he said.

CP, which is Canada's second-largest railroad, disclosed in mid-November a $28 billion offer for Norfolk Southern. The Calgary-based company has said a merger would result in savings of more than $1.8 billion annually.

Virginia-based Norfolk Southern has rebuffed those advances.

A number of Democratic lawmakers in Congress, including all the party's representatives from Illinois and Pennsylvania, have spoken out against a merger.

Some customers also oppose it, including package deliver companies FedEx Corp and United Parcel Service Inc , out of fears the associated cost cuts would hurt rail service. UPS is the largest customer of the major U.S. railroads.   Continued...