CP Rail head office in the U.S. possible, Harrison suggests
Such a move could be part of the negotiations with Norfolk Southern, CEO says
MONTREAL— North America’s largest railway may not have its headquarters in Canada in the event of a merger between Canadian Pacific and Norfolk Southern, Hunter Harrison, CP Rail’s chief executive, says.
The veteran American railroader told an industry conference webcast from Florida on Thursday that details such as the headquarters location and distribution of board seats would have to be worked out during negotiations.
Harrison and his Norfolk counterpart met last week for about two hours to discuss the Calgary-based railway’s offer valued at about $28 billion (U.S.) that was detailed publicly Wednesday.
CP has presented a 50-50 stockand-cash offer that would give U.S.based Norfolk Southern shareholders $46.72 in cash and 0.348 of a share in the new merged company for each share they hold.
That would see Norfolk Southern shareholders own a 41-per-cent stake in the combined company, which would be listed on both the New York and Toronto Stock Exchanges.
Norfolk Southern gave a cool initial response to the takeover proposal, describing it as an “unsolicited, lowpremium, non-binding, highly conditional indication of interest.”
Analysts have described CP Rail’s offer as a “starting point.”
Harrison said he believes all the potential concerns of Norfolk, including price, could be resolved if the two sides sit down for intense talks.
And he confirmed that the offer is not CP Rail’s final “line in the sand.”
He added he’s not aware of any nonfinancial issues that could be an impediment to getting a friendly deal done and believes regulatory and shipper concerns can be addressed.
While he would prefer not to launch a hostile battle, Harrison said he wants to take the proposal to shareholders.
Until a deal closes, the initial structure could see the formation of a holding company headed by Harrison, with Keith Creel, CP chief operating officer, and Norfolk Southern CEO Jim Squires running either of the railways.