The number two Canadian railroad company said it had scrapped efforts to buy Norfolk, almost six months after it launched its unsolicited $28 billion bid for the fourth-largest U.S. railroad operator. Bobbi Rebell reports.
Canadian Pacific is walking away from its $28 billion offer to buy Norfolk Southern after almost six months of pursuing a hostile deal. The fourth largest U.S. railroad company rebuffed its advances, and many customers had spoken out against the bid. For example, both FedEx and United Parcel Service said an acquisition would hurt rail services. Canada's second largest railroad operator also faced regulatory hurdles. On Friday, the U.S. Justice Department urged the Surface Transportation Board to reject a preliminary approval of the offer. It cited concerns about the impact on competition and consumers. And the U.S. military said a merger could impact national security because the military uses rail networks to move defense-related cargo across the country Shares of Canadian Pacific rose on the news. S&P Market Intelligence's Jim Corridore likes that stock over Norfolk Southern, which fell Monday. (SOUNDBITE) JIM CORRIDORE, EQUITY ANALYST, S&P MARKET INTELLIGENCE, (ENGLISH) SAYING: "We have a hold on Norfolk Southern, a buy on Canadian Pacific. We think that the Canadian market is a little bit stronger right now. In particular Canadian Pacific is less reliant on coal and oil than some of the other railroads are so we think that their margins are going to hold up better. " He also says he likes Canadian Pacific as a restructuring story, and that the company will turn its focus to increasing efficiencies now that it is not pursuing a merger.