CP's Harrison Offered Norfolk Southern's Squires a CEO Jobby
Canadian Pacific CEO says confident a deal can be worked out
Harrison says he want to avoid a `hostile position' in offer
Canadian Pacific Ltd. Chief Executive Officer Hunter Harrison said he offered his counterpart at Norfolk Southern Corp. a CEO position if he would agree to a takeover proposal.
In laying out a possible scenario for management of the combined company, Harrison said Jim Squires could be tapped to run either Canadian Pacific or Norfolk Southern. Keith Creel, chief operating officer at Canadian Pacific, could be put in charge of the other railroad and Harrison would head up the parent company.
Canadian Pacific asked Norfolk management for a price it would accept but didn’t receive a response, Harrison said in a webcast presentation at a UBS Group AG conference in Boca Raton, Florida, on Thursday. Harrison said he met once with Squires for about two-and-a-half hours and they haven’t talked again.
Harrison expressed willingness to find a price for Norfolk Southern to make the deal work. Other issues, such as where the headquarters will be located and who gets what position, can be worked out, he said.
Norfolk Southern is “not quite ready” to talk, prompting Harrison to negotiate through the media, he said. Canadian Pacific on Wednesday released details of a letter it had sent to Squires that would value Norfolk Southern at about $28 billion in cash and stock, based on Friday’s close.
“If we all are looking at the shareholder and our fiduciary responsibility to the shareholder and that’s our concerns, then we’re not going to have issues,” he said. “To get there, we’ve got to talk.”
Harrison said he prefers not to get into a “hostile position” on the deal. “We just want to get the message to the shareholders and let them make the decision,” he said.
Harrison said Norfolk Southern’s operating ratio -- an efficiency measure in which a lower number is better -- could fall to as low as 59 percent. Its ratio was about 70 percent in the third quarter.
Approval of a merger shouldn’t take long because there are little overlapping operations, no environmental concerns and shippers’ concerns will be allayed, Harrison said.
“We’re willing to address every issue that I know the shipping public has had,” he said.
Norfolk shares jumped 4.7 percent to $96.85 at the close in New York.
(Earlier versions of this article corrected the spelling of Squires in the headline and the position he was offered.)