Canadian Pacific terminates effort to buy Norfolk Southern
Calgary-based CP launched $28-billion takeover bid almost 6 months ago
Canadian Pacific Railway Ltd said on Monday it had scrapped efforts to buy Norfolk Southern Corp, almost six months after it launched its unsolicited $28 billion bid for the fourth-largest U.S. railroad operator.
The announcement comes days after the U.S. Justice Department urged the Surface Transportation Board to reject a voting trust arrangement Canadian Pacific Railway had proposed as part of its bid.
Calgary-based CP, Canada's second-largest railroad operator, launched its takeover bid for Norfolk Southern in mid-November, touting potential savings of more than $1.8 billion annually.
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But Virginia-based Norfolk Southern had continually rebuffed its advances.
"We have long recognized that consolidation is necessary for the North American rail industry to meet the demands of a growing economy, but with no clear path to a friendly merger at this time, we will turn all of our focus and energy to serving our customers and creating long term value for CP shareholders," CP Chief Executive Hunter Harrison said in a statement.
A number of Democratic lawmakers in Congress, including all the party's representatives from Illinois and Pennsylvania, have spoken out against a merger.
The U.S. military also raised concerns last week, saying a merger could adversely affect the country's national defense. The military relies on rail networks to move defense-related cargo across the country, both during peace and times of war.
Some customers including package delivery companies FedEx Corp and United Parcel Service Inc had also opposed CP's plans out of fears that cost cutting would hurt rail services. UPS is the largest customer of the major U.S. railroads.
Last week the U.S. Department of Justice urged a regulator to reject preliminary approval of the $28-billion US merger.
The department called on the U.S. Surface Transportation Board, which is reviewing the proposed union, to reject early approval of a voting trust structure that CP had put forward.
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