UPDATE 4-Norfolk Southern hostile to Canadian Pacific's $28.4 bln bid
* Norfolk Southern calls bid "low premium", says will evaluate
* Offer is a 9 pct premium to Norfolk's Tuesday close
* Norfolk warns deal would face 'significant regulatory hurdles' (Adds more details on the talks between the companies)
By Greg Roumeliotis
Nov 17 (Reuters) - U.S. railroad operator Norfolk Southern Corp all but rejected a $28.4 billion acquisition offer by Canadian Pacific Railway Ltd on Tuesday, calling it "low-premium" and warning it would face significant regulatory hurdles.
While Norfolk Southern said it would carefully evaluate the offer, its sour response represents a setback to Canadian Pacific as well as its largest shareholder, William Ackman's activist hedge fund Pershing Square Capital Management LP.
Ackman, a big advocate of consolidation in the North American railway sector, recruited Hunter Harrison, who had previously been chief executive officer of Canadian National Railway Co, as CEO of Canadian Pacific in 2012.
In a statement earlier on Tuesday announcing its offer to Norfolk Southern, Canadian Pacific argued that the combined railroad would offer unparalleled customer service and competitive rates for shippers, and that it would satisfy the U.S. Surface Transportation Board (STB) and Canadian regulators.
The STB has a public interest test when considering whether to approve mergers, so a deal would not only have to address antitrust concerns but also result in improved service, economic efficiencies and public safety for those using the railways. Continued...