NS formally rejects CP's revised merger bid

Norfolk Southern Corp. sent a letter today to Canadian Pacific Chief Executive Officer E. Hunter Harrison informing him that the NS board rejects CP's updated buyout offer.

The letter, which NS filed as an 8-K statement, makes official the comments NS officials made in a press release last week after CP updated its original merger proposal. 

In the letter, NS Chairman, President and Chief Executive Officer Jim Squires and Lead Independent Director Steven Leer reiterated their position that the board has reviewed CP's revised proposal submitted Dec. 7, and that nothing in it addresses the NS board's concerns about CP's original bid.

"With respect to the unprecedented voting trust structure included in your revised proposal, contrary to your assertions that this is an improvement to your proposal, it was previously raised by you and was fully reviewed by the board," today's letter states. "Based on the advice of regulatory experts, including former STB commissioners, we believe it is highly unlikely that any voting trust structure would be approved in connection with the proposed transaction, and that the STB would view the unprecedented structure proposed by you to result in premature control being exercised over Norfolk Southern."

Meanwhile, BNSF Railway Co. Executive Chairman Matt Rose said in news interviews last week that BNSF would join in any consolidation in the North American railroad industry.

In an interview with the Fort Worth Star-Telegram, Rose said that BNSF would be open to making a competing offer for NS and that CSX Corp. "would be very much in play."

Although BNSF doesn't favor fresh dealmaking, the railroad won't be left out if any occurs, Rose told the newspaper.

The article also quoted industry consultant Tony Hatch of ABH Consulting, who said Rose's statements were intended to slow a rush of deals that would consolidate the industry.