SMART TD President Previsich came out against the merger in a letter addressed to the Surface Transportation Board (STB) in January of this year. “We strongly opposed the merger when it became clear that CP’s takeover of NS would cost U.S. jobs as well as have a negative impact on those who sought to ship by rail” said Previsich, who further commented: “Having long opposed the negative impact that mergers and acquisitions such as this have on our members, we are extremely pleased to hear that CP has officially terminated their quest to takeover NS.” Read the complete statement, here.
Tag: merger
In a press release dated April 11, 2016, Canadian Pacific Railway (CP) announced that it has terminated its efforts to merge with Norfolk Southern (NS). CP has also withdrawn its resolution asking NS shareholders to vote in favor of good-faith negotiations between the two companies. “No further financial offers or overtures to meet with the NS board of directors are planned at this time,” CP said in their statement. CP CEO E. Hunter Harrison said, “…with no clear path to a friendly merger at this time, we will turn all of our focus and energy to serving our customers and creating long term value for CP shareholders.” SMART TD President Previsich came out against the merger in a letter addressed to the Surface Transportation Board (STB) in January of this year. “We strongly opposed the merger when it became clear that CP’s takeover of NS would cost U.S. jobs as well as have a negative impact on those who sought to ship by rail” said Previsich, who further commented: “Having long opposed the negative impact that mergers and acquisitions such as this have on our members, we are extremely pleased to hear that CP has officially terminated their quest to takeover NS.” SMART TD first reported CP’s interest in a merger with NS in November 2015. It soon became clear that NS was not interested when the railroad rejected all three of CP’s offers for unification. CP, however, continued to push for a takeover by trying to bypass the NS board of directors’ decision by going directly to the shareholders for a vote. “They don’t merge these big railroads to create job opportunities,” said SMART TD National Legislative Director John Risch. “CP’s plans were to essentially pillage NS’s infrastructure, claiming they could save $1.8 billion a year in costs. A CP/NS merger would not just be bad for rail workers, it would be terrible for America’s freight rail infrastructure.” Additionally, in a letter dated March 2, CP further sought to circumvent U.S. merger regulations by seeking declaratory action from the STB that would give them the power to essentially take over NS without a review from the STB or a yes-vote to merge from NS. This blatant scheme to evade U.S. regulatory requirements and assert control over NS before receiving regulatory approval did not sit well with SMART TD who joined with five other unions to write a response letter to the STB asking them to reject CP’s request. “…The Board should not entertain a request from this, or any carrier, for an advisory opinion on a hypothetical transaction. CP’s Petition is both inappropriate and untimely; it should be dismissed,” said SMART’s Associate General Counsel Erika Diehl-Gibbons and Attorneys Michael Wolly and Carla Siegel in their letter to the STB on behalf of SMART TD, BLET, IBEW, ATDA, NCFO and TCU/IAM. “The work and solidarity of SMART, BLET, TTD, AFL-CIO and all of our union brothers and sisters to raise this issue onto a public platform and to have our voices heard from the halls of Congress to the offices of the STB and FRA, had a direct impact on breaking CP’s attempt to continue its takeover bid–that if left to proceed, would have undoubtedly caused a major job loss, service disruption and a destructive domino effect throughout the industry. We look forward to our continued work and solidarity in supporting laws and provisions that protect our members –and all workers, from get-rich-quick schemes that are harmful to working men and women throughout our country,” said Previsich. The U.S. Department of Justice (DOJ) also filed its own request to the STB that CP’s request be denied. “Canadian Pacific’s voting trust proposal would compromise Norfolk Southern’s independence and effectively combine the two railroads prior to completion of the STB’s review,” said Assistant Attorney General Bill Baer of the Justice Department’s Antitrust Division. “That makes no sense. We urge the STB to preserve its ability to review the impact of the proposal on competition and consumers before Canadian Pacific starts scrambling the eggs.” ______________________________________________________________________ The SMART Transportation Division is comprised of approximately 125,000 active and retired members of the former United Transportation Union, who work in a variety of crafts in the transportation industry.
The Hill.com reported yesterday that Sen. Joe Manchin (D-W.Va.) is requesting a Senate hearing to investigate Canadian Pacific’s proposed takeover of Norfolk Southern. The Hill quoted Manchin as describing the proposal as a “Wall Street takeover.”
Read the complete article here.
In a letter dated, January 14, SMART TD President John Previsich wrote the Surface Transportation Board opposing a Canadian Pacific Railway proposal to acquire Norfolk Southern Railroad.
See the letter in its entirety below or click here to read the letter.
“Dear Chairman Elliott, Vice Chairman Miller and Member Begeman:
“I am writing to you on behalf of the Transportation Division of the International Association of Sheet Metal, Air, Rail and Transportation Workers (SMART TD), regarding Canadian Pacific Railway’s (CP) proposal to acquire Norfolk Southern Corporation (NS).
“As the representative of more than 125,000 active and retired railroad workers, I am writing to convey that we are strongly opposed to this takeover proposal. This action has the real potential for a far-reaching, detrimental impact on America’s rail network, including lost jobs and an equally negative impact on those who ship by rail. We also strongly oppose CP’s scheme to circumvent the regulatory requirements through the establishment of a voting trust to assume control in advance of regulatory approval. Such a trust would violate existing statutory and regulatory prohibitions regarding unlawful control.
“CP’s relentless pursuit of short-term profit with little regard to the impact on the greater good—workers, communities and our nation’s rail shippers is well known. History shows what happens when railroads harvest revenue for immediate self-enrichment of officers and stockholders at the expense of investing in maintenance and capital projects to ensure a viable industry well into the future. If approved, this merger would mean fewer railroads and less competition in the industry. The certain results will be fewer rail jobs, higher freight rates and diminished rail service.
“E. Hunter Harrison, CEO of CP, has already boasted in the press that NS will be a “cash cow” because he will be able to sell off what he says are “excess” rail yards for real estate development. He has also stated that NS has a “gold plated” infrastructure that is overly maintained and he could greatly reduce capital investment on that road. Such a disinvestment in the nation’s rail network could only occur in a merged environment with diminished competition among carriers. The end result is higher costs and reduced service for the nation’s shippers.
“In addition, Harrison recently announced that he will reduce capital spending on CP in 2016 by $400 million and extend his moratorium on purchasing new locomotives until 2018 or longer on that railroad. His strategy is clear; use up the current railroad infrastructure and wear out the locomotives, leaving a railroad that will need dramatic investment once he leaves. The railroads’ officers, investment bankers, consultants and stockholders will walk away greatly enriched at the expense of the future health of our nation’s rail service. In fact, a January 12, 2016 white paper issued by CP in Calgary reveals that CP’s scheme for NS is to improve service by reducing investment, a plan that they note in their closing remarks may not produce the desired results: “CP’s forward-looking information involves numerous assumptions, inherent risks and uncertainties that could cause actual results to differ materially from the forward-looking information” and that “forward-looking information is not a guarantee of future performance.”
“In summary, if Harrison is allowed to take his CP model to the NS, through either a voting trust or with regulatory approval, the end result will produce an irrecoverable disinvestment in NS’s infrastructure, substantially diminished freight service, and a marked loss of jobs.
“We urge members of the STB to safeguard our jobs and protect our nation’s freight rail infrastructure and those who ship by rail by advocating for the public interest, not enabling short term profits for the benefit of a few at the expense of the future viability of our nation’s rail system. We ask that the STB reject the proposed acquisition and also take legal action as required to prevent the circumvention of your regulatory authority through the establishment of a voting trust.”
“You don’t merge two railroads like this to create job opportunities, but to boost profits for a few investors,” stated John Risch, National Legislative Director of SMART Transportation Division, to Reuters reporter, Nick Carey.
Click here to read the complete Reuters article.
The Globe and Mail reported that a proxy fight is likely between Canadian Pacific and Norfolk Southern.
In a recent regulatory filing, NS said that the premium offered by CP in its proposal was too small and the merger and the voting trust proposed would not be approved by regulators.
Read the complete article here.
NewsmaxFinance.com reported that Warren Buffett’s BNSF railroad, owned by Berkshire Hathaway Inc., may offer a competing bid for Norfolk Southern Corp, throwing a wrench in Canadian Pacific Railway’s efforts for a $27 billion takeover of Norfolk Southern.
Read the complete article here.
OMAHA, Neb. (AP)—U.S. News & World Report reported today that Norfolk Southern (NS) denied Canadian Pacific’s (CP) takeover offer, but it appears that CP persists, as they are reportedly set to bring their proposal to NS stakeholders.
Read the entire article at U.S. News & World Report Dec. 8.
Norfolk Southern (NYSE: NSC) announced that its board of directors has unanimously rejected Canadian Pacific’s (NYSE:CP) previously announced unsolicited, low-premium, non-binding, highly conditional indication of interest to acquire the Company for $46.72 in cash and a fixed exchange ratio of 0.348 shares in a new company that would own Canadian Pacific and Norfolk Southern.
After a comprehensive review, conducted in consultation with its financial and legal advisors, the Norfolk Southern board concluded that the indication of interest is grossly inadequate, creates substantial regulatory risks and uncertainties that are highly unlikely to be overcome, and is not in the best interest of the Company and its shareholders.
Read more from StreetInsider.com.
Canadian Pacific Railway Ltd., the second-biggest railroad in Canada, is exploring a takeover of U.S. carrier Norfolk Southern Corp. in a fresh attempt to consolidate the North American industry, according to people familiar with the matter. The shares surged on the news. Canadian Pacific is raising financing and has held early-stage merger talks with Norfolk Southern, which is valued at about $24 billion, said two of the people, who asked not to be identified because deliberations are private. Discussions are preliminary and talks may not progress or lead to a deal, they said. Representatives for Canadian Pacific and Norfolk declined to comment. A move for Norfolk Southern, the second-biggest railroad in the eastern U.S., would revive Canadian Pacific’s effort to build a transcontinental carrier after talks with CSX Corp. failed last year. In floating the idea of a CSX tie-up, Canadian Pacific Chief Executive Officer Hunter Harrison upended the long-held view in the industry that it was fruitless to even discuss another merger because regulators would object. Read more from Bloomberg Business.