Canadian Pacific Offers to Acquire Norfolk Southern

Last week, rail carrier Norfolk Southern rejected a $28.1 billion acquisition offer by Canadian Pacific Railway. Norfolk did not solicit the offer, and rejected it on the grounds that Canadian Pacific's interest level is “grossly inadequate, creates substantial regulatory risks and uncertainties that are highly likely to be overcome,”. Canadian Pacific feels that an acquisition would make sense for several reasons - including attractive results for shareholders of Norfolk Southern's investors.

Earlier this week, Canadian Pacific released the following statement:

“The rail industry came out of 2014 with a substantial amount of criticism about the lack of infrastructure and being able to handle traffic throughout North America,” he said. “We address those concerns very seriously and took a look at enhancing infrastructure and doing some things differently, and we found we were met with opposition from local communities with s NIMBY (“not in my back yard”) mentality, so as a common carrier we don’t have a choice about hauling these goods. At the same time people are opposing consolidations or merger actions, so the question becomes what do we do in the future and in the east and with additional growth if infrastructure cannot be added? As we went through those issues one of the things that quickly came up was potential consolidation.”