January 8, 2016 / 5:38 PM / 3 years ago

Two unions join chorus against Canadian Pacific's Norfolk Southern bid

CHICAGO (Reuters) - Two trade unions representing workers at No. 4 U.S. railroad Norfolk Southern Corp (NSC.N) have joined a growing chorus of opposition to an unsolicited bid from Canadian Pacific Railway Ltd (CP.TO), one in an unpublished letter sent to the U.S. rail regulator and the other in an interview with Reuters.

The Canadian Pacific railyard is pictured in Port Coquitlam, British Columbia in this file photo from February 15, 2015. REUTERS/Ben Nelms/Files

The moves add to a growing list of opponents to any deal, which includes customers of Norfolk Southern and a number of elected U.S. officials.

In a Jan. 7 letter to the Surface Transportation Board that has not yet been made public but was viewed by Reuters, Transportation Communications Union/International Association of Machinists President Robert Scardelletti urged the rejection of any proposed merger.

“CP’s proposed merger would result in massive job reductions of United States rail workers,” Scardelletti wrote. “If such a merger is approved, it undoubtedly would lead to further consolidation of the remaining U.S. carriers, with attendant job loss throughout every railroad craft.”

The TCU/IAM letter comes a few days after Reuters reported on a series of letters from Norfolk Southern customers to the STB opposing any merger.

Norfolk Southern declined to comment. A Canadian Pacific spokesman said this was evidence that Norfolk Southern “continues to mislead all stakeholders” while refusing to meet to discuss “the merits of this transformational opportunity.”

The Canadian company in mid-November disclosed its $28 billion offer to buy Norfolk Southern.

Opponents fear any deal could trigger a wave of mergers that would leave North America with an anticompetitive rail duopoly and that Canadian Pacific would squeeze profit out of Norfolk Southern by cutting back on necessary investments.

It would be the first merger involving a U.S. railroad since the STB rewrote rules in 2001 after a flurry of consolidation reduced the number of major North American railroads to seven from 35.

The proposed merger is expected by analysts to face a tough review.

A number of elected officials including two senior U.S. House Democrats have come out against any deal.

Separately, John Risch, the national legislative director for the transportation division of the SMART Union, said his labor organization was “very concerned” that Canadian Pacific would strip Norfolk Southern of workers and necessary investments.

“You don’t merge two railroads like this to create job opportunities but to boost profits for a few investors,” he told Reuters in an interview.

Risch said SMART “will very likely” voice concerns directly to the STB in the near future.

Editing by Matthew Lewis

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