Fresh blow to CP Rail’s merger hopes as U.S. House Transportation chief opposes union with Norfolk Southern

WASHINGTON/CHICAGO – The chairman from the U.S. House Transportation and Infrastructure Committee announced his opposition to Canadian Pacific’s proposed railroad merger with Norfolk Southern Corp, dealing a fresh blow towards the prospect of a deal.

“I don’t believe it is within the best interests of the U.S. freight transportation system, railroad employees, rail shippers and also the short line railroads,” Representative Bill Shuster, a Pennsylvania Republican, said in a statement.

“In my opinion it is time for those parties to move on from hypothetical merger proposals,” he said.

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CP, which is Canada’s second-largest railroad, disclosed in mid-November a US$28 billion offer for Norfolk Southern. The Calgary-based company has stated a merger would result in savings of more than $1.8 billion annually.

Virginia-based Norfolk Southern has rebuffed those advances.



A number of Democratic lawmakers in Congress, including all of the party’s representatives from Illinois and Pennsylvania, have spoken out against a merger.

Some customers also oppose it, including package deliver companies FedEx Corp and United Parcel Service Inc , from fears the associated cost cuts would hurt rail service. UPS may be the largest customer of the major U.S. railroads.

Shuster’s opposition could resonate with the U.S. Surface Transportation Board, a federal rail regulator which has said hello will not approve a major railroad merger shown to not be in the general public interest. CP and Norfolk Southern would have to accept a merger in front of you review by the STB.

Shuster noted that Canadian Pacific had actively pursued a merger in the usa since 2014. An earlier bid was rejected by CSX Corp.

“A strong, healthy and well-functioning freight rail product is critical to the movement of goods in this country,” he said in the statement.

“However, CP’s quest for a merger during the last two years has done only create uncertainty within the rail industry, and there continues to be no clear path forward for this kind of arrangement.”

A CP spokesman said within an email that the merger with Norfolk Southern provides “better, faster service for shippers” cheaper.

“The end result will be a single-line, transcontinental option that improves market access and ensures the timely and efficient flow of freight,” the spokesman said.

Norfolk Southern shares were down 1.8 percent in midday trading around the New York Stock Exchange, while CP shares were largely unchanged around the Toronto Stock Exchange.

? Thomson Reuters 2016