CP Rail CEO Harrison Says CSX Combination Still PossibleBy
`Nobody made any offers' at meeting between companies, he says
Canadian Pacific still seeks a takeover of Norfolk Southern
Canadian Pacific Railway Ltd. is still interested in exploring a merger with CSX Corp. even as Canada’s second-largest carrier continues to pursue Norfolk Southern Corp., Chief Executive Officer Hunter Harrison said.
Canadian Pacific and CSX “sat down and did what we call, ‘Let’s explore some opportunities,’” Harrison said in an interview Tuesday on Canada’s BNN Television. CSX management didn’t say no, he said. “Nobody made any offers.”
CSX shares had jumped as much as 8 percent in after-hours trading on March 1 after the Wall Street Journal reported Canadian Pacific approached CSX about a takeover in January and was rebuffed. On Tuesday, Harrison disputed the notion that the U.S. railroad shut the door on his company.
“I don’t know how we got rebuffed because we never made an offer,” he said.
Harrison has been pursuing an acquisition that would create a coast-to-coast railroad, eliminating rail-car exchanges between carriers. He set his sights on Norfolk Southern, which lags behind other large carriers in key efficiency metrics, after exploratory talks on a possible linkup with CSX in 2014 failed to gain momentum for a deal. Norfolk Southern has rejected Canadian Pacific’s overtures.
“It’s hard to speculate on what is going to happen,” Harrison said Tuesday regarding any plans for CSX. He added that he has no preference between merging with CSX or Norfolk Southern.
“We believe we could fit end-to-end with anyone and create a stronger rail system,” he said.
CSX doesn’t comment on “merger speculation,” Melanie Cost, a spokeswoman for Jacksonville, Florida-based CSX, said Tuesday in an e-mail.
Canadian Pacific made three offers last year to buy Norfolk Southern, including one in December that valued the U.S. company at $27 billion. All were rejected as “grossly inadequate” and carrying regulatory risk.
The Calgary-based railroad is putting forward a resolution to Norfolk Southern shareholders requesting that the U.S. company’s board engage in “good faith” discussions. Should that resolution be rejected, CP would end efforts to merge with Norfolk Southern and focus on its own network, Harrison said, reiterating earlier comments.
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