U.S. Sen. Dick Durban (D-Ill.) and other congressional representatives of Illinois are registering concern with the Surface Transportation Board (STB) over Canadian Pacific’s proposed takeover of Norfolk Southern Corp.
In a letter sent yesterday to STB Chairman Daniel Elliott III and board members, Durbin and others leaders asked the STB to consider the economic impact such a merger would have on the Chicago area.
“We urge you to carefully review any plans submitted to the STB, and consider the potential negative impact of the proposal with respect to building a more efficient freight network in Chicago … and comprehensively examine the economic effects of such a consolidation on local industries and jobs in the Chicago region.”
The letter asks the STB to consider whether the merger would take business away from Illinois and the United States by diverting business to Canada, as well as whether CP would “cut costs on the backs of Illinois workers.”
In addition to Durbin, the letter was signed by U.S. Reps. Dan Lipinski, Tammy Duckworth, Danny Davis, Mike Quigley, Bobby Rush, Cheri Bustos, Luis Gutierrez, Jan Schakowsky and Bill Foster. All are Democrats.
CP Chief Executive Officer E. Hunter Harrison told investors that a merger between the two Class Is would reduce rail congestion in the Chicago area.
NS said its board had unanimously rejected CP’s latest offer, which NS officials described as “grossly inadequate.”
Buffett’s BNSF May ‘Participate’ In CP-Norfolk Battle
Shares of Norfolk Southern (NYSE:NSC) rose Friday on a report that BNSF Railway Chairman Matt Rose said his company may enter the bidding for the struggling railroad.
BNSF, which is controlled by Warren Buffett’s Berkshire Hathaway (NYSE:BRKB), might step in to provide a competitive bid to Canadian Pacific Railway’s (NYSE:CP) $28 billion hostile offer for Norfolk Southern, Rose told Bloomberg in an interview.
He added that he doesn’t favor more mergers after an earlier wave of consolidation in the industry, but if there is M&A activity to be had, “we would participate as well.”
Norfolk Southern on Dec. 4 said its board had unanimously rejected Canadian Pacific’s bid, leading to speculation that there could be a proxy fight if activist investors want to pursue the merger. Norfolk said on Tuesday that it also rejected a revised bid from Canadian Pacific.
A Canadian Pacific/Norfolk Southern tie-up would create a transcontinental railroad large enough to challenge dominant Union Pacific (NYSE:UNP), the largest in North America by revenue.