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CP proposes merger with U.S. rail company

Canadian Pacific (CP) has proposed a merger with U.S.-based rail company Norfolk Southern Corp. In the Nov.
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Canadian Pacific locomotive

Canadian Pacific (CP) has proposed a merger with U.S.-based rail company Norfolk Southern Corp.

In the Nov. 17 announcement, CP says the deal would “create a transcontinental railroad with the scale and reach to deliver improved levels of service to customers and communities while enhancing competition and creating significant shareholder value.”

Under the agreement, Norfolk shareholders would get 50 per cent cash, 50 per cent stock in a new company that would own CP and Norfolk. The new company would be listed on both the New York and Toronto Stock Exchanges, according to a news release.

CP said advantages of the merger include better rates for customers, more efficient service, and faster company growth than either company could achieve on its own.

In the release, CP estimated the new company could realize more than $1.8 billion in annual operating synergies over the next several years, in addition to tax savings.

It said it was confident it could meet both Canadian and U.S. regulatory guidelines.

In a response, Norfolk said it would consider the proposal in the context of its strategic plans, adding it remains committed to enhancing value for shareholders.