Canadian Pacific Details Offer for Norfolk Southern
19 November 2015 - 12:50AM
Dow Jones News
Canadian Pacific Railway Ltd. on Wednesday released the full
details of the merger-proposal letter it sent to Norfolk Southern
Corp., confirming a cash-stock offer that it said would value the
combined company at $270.68 per share.
The terms of the offer, at $46.72 in cash and 0.348 shares of
the merged company for each Norfolk Southern share, are in line
with figures released by Norfolk Southern late Tuesday.
Based on CP's closing price Tuesday, the offer would be worth
$94.95 a share, or more than $28 billion.
According to the text of the letter, CP said the merged company
would be listed on both the New York and Toronto Stock Exchanges,
with Norfolk Southern shareholders owning 41% of the new
company.
CP said it based the $270.68 per share value of the new entity
in part on the "substantial synergies" created by a merger and a
completion date of Dec. 31, 2017.
CP shares closed Tuesday in New York at $138.58 and Norfolk
Southern closed at $86.97.
The Canadian railroad outlined a number of possible benefits of
merging in its letter, including the potential for more than $1.8
billion in annual operating synergies over the next several years
and tax-savings opportunities.
"We are ready to begin working with you and your team
immediately on this transformational opportunity and are prepared
to commit whatever resources may be necessary to complete the
proposed transaction expeditiously and in a manner which both
recognizes and fairly addresses any social considerations related
to the successful integration of our two great companies," CP said
in the letter.
CP said Tuesday it had sent a letter to Norfolk Southern
outlining a proposal, but didn't provide specific numbers. In a
statement later Tuesday, Norfolk Southern said it had received an
"unsolicited, low-premium, nonbinding and highly conditional
indication of interest" from Canadian Pacific to acquire the
company.
A merger between the two railroads would create an industry
giant with a combined market value of about $47 billion, and a rail
network that would stretch from the Canadian West Coast to the Gulf
of Mexico and U.S. Atlantic seaboard.
Write to Judy McKinnon at judy.mckinnon@wsj.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires
(END) Dow Jones Newswires
November 18, 2015 08:35 ET (13:35 GMT)
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