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CP seeks order from regulator on deal structure for Norfolk buy

Published 2016-02-16, 09:43 a/m
© Reuters. CP seeks order from regulator on deal structure for Norfolk buy
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Feb 16 (Reuters) - Canadian Pacific Railway Ltd CP.TO
CP.N said it would seek an order from the U.S. federal rail
regulator confirming the viability of a complex deal structure
that it intends to use in its proposed takeover of Norfolk
Southern Corp NSC.N .
The rarely used deal structure, known as a voting trust,
would allow Canadian Pacific and Norfolk Southern (N:NSC) to remain
independent until their merger gets regulatory approval, but
allows the U.S. railroad's shareholders to get paid before the
deal closes.
The U.S. Surface Transportation Board (STB) would need to
approve the voting trust before beginning the deal review
process. Norfolk Southern, which has repeatedly rebuffed
Canadian Pacific, has said it does not believe the voting trust
will be approved.
"We are skeptical that the STB will give a definitive
ruling, especially when NS will not even sit down with us, but
we are willing to go the extra mile if that is what it takes to
get NS to the table," Canadian Pacific Chief Executive Hunter
Harrison said in a statement.
The Canadian company's $28 billion offer to buy Norfolk
Southern, first disclosed in mid-November, is facing opposition
from a number of industry groups, rail customers and a couple of
the unions representing workers at Norfolk Southern.
Democrats from Pennsylvania's congressional delegation sent
a letter to the STB earlier this month, raising concerns about
impact of the proposed merger and the voting trust structure.

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