BY JOSH FUNK
The Associated Press
OMAHA, Nebraska – Canadian Pacific is increasing its offer to buy Norfolk Southern railroad by adding a payment that would vary depending on the stock price of the new company.
Canadian Pacific CEO Hunter Harrison said Wednesday that his company remains committed to the deal despite Norfolk Southern’s opposition. He wants shareholders of the Norfolk, Virginia, railroad to decide whether to pursue it.
Norfolk Southern has already rejected two previous offers from Canadian Pacific, and the two railroads have started issuing dueling news releases at every step of the process. But Harrison said he still hopes to sit down and negotiate a deal with Norfolk Southern.
“I just don’t understand the rationale of saying we won’t talk,” Harrison said.
Norfolk Southern didn’t have an immediate comment by midday Wednesday.
Canadian Pacific said its new offer could add as much as $3.4 billion to its previous offer that it estimated was worth between $37 billion and $42 billion. That value is based on the projected value of stock in a new company that would own both railroads.
Norfolk Southern has said the previous offer was worth roughly $27 billion based on current share prices and “grossly indequate.”
In the latest offer, Canadian Pacific is offering to pay Norfolk Southern investors up to roughly $11.30 per share more if shares of the combined company are worth less than $175 in October 2017. But if the shares are worth more than $175, that payment would be reduced to zero.
One of the key questions is whether federal regulators would approve such a merger.
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