OMAHA, Neb.—Norfolk Southern rejected Canadian Pacific’s latest takeover offer less than an hour after it was announced Tuesday, but the Canadian railroad now appears ready to take its case directly to the shareholders of its rival.
The new offer includes $32.86 cash and 0.451 shares in the combined company that would own both railroads.
That includes less cash than the initial offer of $46.72 per share, but more equity than last month’s offer of 0.348 shares in the combined company. Norfolk Southern shareholders would own 47 percent of the new company under the latest offer, up from 41 percent initially.
The new bid also promises that Norfolk Southern shareholders could receive the cash next spring before federal regulators complete their review, which might take roughly two years.
The two railroads don’t agree on how to value the shares in the new company. Canadian Pacific estimates the offer should be worth between $125 and $140 a share at closing next May, but Norfolk Southern says the value is closer to $91.62 per share.
“Canadian Pacific’s revised, reduced proposal is not only less than what the Norfolk Southern board has already found to be grossly inadequate, it is even more uncertain and risky given the decrease in the cash consideration,” Norfolk Southern Chairman, CEO and President Jim Squires said.
