CP Railway Dodges Deal Queries While Saying M&A Is Inevitable

Canadian Pacific Railway Ltd.’s chief operating officer declined to confirm interest in a merger with U.S. carrier Norfolk Southern Corp. while asserting that further industry dealmaking is inevitable.

“When it comes to consolidation, it’s not if, it’s when,” COO Keith Creel said Tuesday during a presentation to analysts, eight days after Bloomberg News reported that the railroad was exploring a takeover of Norfolk Southern. Beyond that, he said: “I can’t substantiate any rumors on M&A.”

Creel’s appearance at a Scotiabank conference in Toronto focused analysts’ and investors’ attention on the status of Canadian Pacific’s pursuit of Norfolk Southern, a deal that would create a transcontinental North American carrier. But he wouldn’t acknowledge that the company was trying again after failed talks last year with CSX Corp. on a similar tie-up.

Norfolk Southern slumped the most since August after CNBC’s David Faber said, without explaining where he got the information, that the railroad wasn’t interested in a deal with Calgary-based Canadian Pacific. The stock slid 3.4 percent to $85.34 at 10:08 a.m. in New York. Canadian Pacific rose 0.1 percent to C$183.48.

Since U.S. deregulation in 1980, the North American rail industry has shrunk to four major U.S. carriers plus Kansas City Southern, which operates in the middle of the country and into Mexico, and two large Canadian operators: Canadian Pacific and Canadian National Railway Co.

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