CP files preliminary proxy statement for NS shareholder resolution

Canadian Pacific Railway filed a preliminary proxy statement with the U.S. Securities and Exchange Commission that outlines the shareholder resolution that the railroad wants considered at Norfolk Southern Corp.'s upcoming annual meeting.

The resolution will ask shareholders to approve the resolution that would require the NS board to promptly engage in good faith discussions with CP regarding the Canadian railroad's merger proposal.

CP has proposed taking over NS to create a transcontinental railroad that CP executives argue would have the scale and reach to deliver better safety and service to customers of both railroads. To date, NS has rejected CP's three offers to merge and has declined to meet with CP to discuss it.

CP Chief Executive Officer E. Hunter Harrison said he hopes the resolution will convince NS executives to sit down and discuss a merger.

"This is an opportunity for NS shareholders — who have been telling us since the beginning that they are in favor of the proposed business combination – to speak up and be heard by NS' board of directors," said Harrison in a press release. "We are not asking NS shareholders to vote on the business proposal itself, but to vote in favor of the shareholder resolution calling for NS to engage in good faith discussions with CP regarding a potential combination."

In a Feb. 29 filing with the SEC, the NS board encouraged NS shareholders to oppose CP's proposal.

"We believe that by rejecting the CP proposal, shareholders will send a clear message to CP that Norfolk Southern shareholders support greater value and regulatory certainty from CP," the NS filing states. "If CP were to state a willingness to meaningfully increase the consideration it is offering and were to receive a declaratory order from the Surface Transportation Board [STB] validating its proposed voting trust structure, then the Norfolk Southern Board would engage in good faith discussions regarding a potential business combination."

CP is seeking a declaratory order from the STB on the railroad's proposed voting trust structure and has "consistently indicated its openness to discussing the terms of previous offers," Harrison said in the press release.

"With a vote 'for' the shareholder resolution, we hope to get NS to the table to discuss all the elements of the proposed business combination in an open and constructive manner," he added.

NS has not yet announced a date for the annual meeting.