Canadian Pacific Takeover Interest Leads To Norfolk Southern Trading Halt

Norfolk Southern’s stock, which on November 10, 2014, closed at $116.60 in trading on the New York Stock Exchange, closed Monday at $88.62, up $8.75 a share.

On Monday afternoon, a Bloomberg article informed that Canadian Pacific Railway, the second-largest biggest railroad in Canada, was considering a takeover of Norfolk Southern Corp., a big-cap USA carrier.

A move for Norfolk Southern, the second-biggest railroad in the eastern USA, would revive Canadian Pacific’s effort to build a transcontinental carrier after talks with CSX Corp. failed previous year.

Canadian Pacific did the same: “CP does not comment on market rumour and speculation”, said spokesman Martin Cej in an email. In after hours, the stock further gained $0.32 or 0.23%.

“We don’t comment on rumors”, said Susan Terpay, a Norfolk Southern spokeswoman.

Norfolk Southern, which operates roughly in the same territory as CSX, has 29,000 employees, more than double that of CP.

Barnes noted US regulators would have to sign off on a foreign company owning a strategic asset, like a railroad and that CP would also need to win approval from the U.S. Surface Transportation Board that reviews such deals. But Harrison, 71, is a veteran of past rail mergers, and has led an operational turnaround at Canadian Pacific since being lured out of retirement in 2012 by activist investor Bill Ackman, whose Pershing Square Capital Management is the biggest shareholder. Primarily eastern-based and CSX’s main rival on the eastern seaboard, it connects with the western network in Chicago, which is the central hub of North America’s rail network.

The railroads’ cargo markets are complementary. CP, meanwhile, was up about five per cent to $182. Autos and auto parts contributed about 9 percent.

Canadian Pacific is worth about $29 billion on the TSX. Norfolk, Virginia-based Norfolk Southern declined 27 percent in that span.

Norfolk Southern recently reported that coal revenue for the third quarter slipped 23 percent from the same quarter a year ago.